The fiscal regime of the Stabroek Block Production Sharing Agreement (PSA) continues to be a key factor behind ExxonMobil’s decision to continue investing billions of U.S. dollars into Guyana. So says Vice President and Business Services Manager at ExxonMobil Guyana Phillip Rietema.
“The contract incentivizes us to keep investing and keep exploring so that we can find all the commercially valuable resources and together…we can develop those for the benefit of Guyana and all stakeholders,” Rietema shared during his June 30 appearance on the Energy Perspectives podcast.
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According to Rietema, Exxon has already pumped over US$30 billion into its Guyana operations and expects to invest even more in the coming decades.
With this in mind, he noted Exxon’s expectation that the contract remains unchanged to enable continued investment.
“We’ve seen in other parts of the world, there’s changes [to the] fiscal regime and [that] contracts change…that make it hard for companies to invest… [so] this contract is doing what it set out to do,” he added.
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Per the PSA terms, the profits are split 50/50 between government and contractor, after investments are recovered up to a ceiling of 75% of produced barrels for a given period. The companies also pay Guyana royalties of 2% of the value of oil produced and sold. This works out to Guyana getting approximately 14.5% of the value of the oil produced. After costs are recovered, Guyana’s share is expected to increase substantially.
The 2% royalty is paid every quarter.
Guyana received no royalties in May. Guyana’s Natural Resource Fund (NRF) received over US$162 million of the US$319.91 million in oil royalties expected this year, recorded in January and April deposits. The next deposit of royalties is expected in July.
