The contention that Guyana would not be able to reap the benefits of oil production without racking up millions of dollars in debt to Stabroek Block operator ExxonMobil is misleading, said the country’s Vice President, Dr. Bharrat Jagdeo.
During a recent press conference, he sought to denounce claims which were made by a United States based analytics firm, the Institute for Energy Economics and Financial Analysis (IEEFA).
IEEFA said each citizen owes ExxonMobil some GYD$9 million each but, according to the VP, this was only said to confuse the masses.
“The only debts that this country has to repay are debts contracted or guaranteed by the state, and I told you already that is only 16% of Gross Domestic Product (GDP). So, no debt contracted by Exxon or any of these companies are guaranteed, or we are party to. So, the citizens of this country do not have to pay,” Dr. Jagdeo clarified.
The additional claim that Guyana would not reap the benefits of its oil wealth until it repays its debts to the oil companies was also debunked by the Vice President.
“If you look at even the original agreement that was signed since 1999, you will see that there is a cut-off point for cost recovery from revenue of 75% [so] 75% of revenue goes to cost recovery, including servicing and everything else, and 25% from day one becomes available as profit oil, of which we will get 12.5% and then a 2% as royalty, which gives us about 14.5% from day one.”
The Vice President was pointing out the terms of the agreement between Exxon and Guyana which provides for the South American country to receive half the profits from oil produced and sold, in addition to two percent royalty. Guyana is also not required to plug any money up front for exploration and production operations. This is a risk carried solely by the oil companies operating offshore.
The Vice President pointed out that the current oil vessels operating in Guyana can garner enough revenue – with a share of US$50 per barrel – to clear the country’s debt level.
If that share increases, to say, US$100, Guyana’s revenue would be greater; in fact, the VP pointed out further that one year’s revenue in the future would be “twice the size” of the country’s current debt level.
“[So], they are just confusing the heads of people with this nonsense that passes off as analysis,” he added.