Representatives of both the Guyana government and main opposition party on Thursday refuted claims that Stabroek Block co-venturers ExxonMobil, Hess and CNOOC are shortchanging the country in quarterly royalty payments.
Economic Advisor in the opposition party, Elson Low, said that Guyana is getting royalty payments from oil operations at a 2% rate, as stipulated in the Production Sharing Agreement. He said this when the claim was put to him during a March 7 press conference that the Stabroek Block partners are paying Guyana less than the 2% royalties.
“We had a look at that, and given what the finance ministry has indicated, and given what we’ve been seeing from the Bank of Guyana, the proportion of royalty being collected relative to the proportion of profit oil payments, or you could say lifts that have been generated, is commensurate with a 2% royalty and not a 0.5% royalty,” Low said.
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Similarly, Guyana’s Vice President Dr. Bharrat Jagdeo refuted the claim during his own media conference later that day.
“There is no deduction whatsoever. So, royalty is calculated on the basis of production and total sales. Every month, they have to confirm what the average price would be, the weighted average, and the [government] gives approval for that,” the Vice President said.
The Stabroek Block PSA governs the division of shares of crude and the payment of royalties for all current oil production being conducted by ExxonMobil offshore Guyana. Aside from the 2% royalty clause, the PSA grants Exxon and its co-venturers up to 75% of the crude produced annually to repay their expenses and splits the remaining ‘profit oil’ 50/50 between the government and the consortium.
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Royalties are paid on a quarterly basis in January, April, July and October. The Bank of Guyana reports the status of Guyana’s Natural Resource Fund (the oil fund) monthly and quarterly, noting every deposit of profit oil revenue and royalties, and accruals of interest.
The Ministry of Finance reports statistics on oil exports every year and sends out a release every time it makes a deduction from the fund. The government also publishes payments to the fund in The Official Gazette, as required by law.
