Saturday, May 21, 2022

Guyana to establish petroleum cost recovery sub-committee

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OilNOW
OilNOW is an online-based Information and Resource Centre

As preparation ramps up for oil production in 2020, the Government of Guyana is to establish a cost-recovery sub-committee, according to information reaching OilNOW. While details remain sketchy, it is believed that this sub-committee will be resident within the Ministry of Natural Resources.

That Ministry is already working together with the Ministry of Finance as part of an inter-ministerial technical committee on petroleum.

The Production Sharing Agreement (PSA) allows for the operator – ExxonMobil – to utilize a maximum of 75% of production (after royalty is subtracted) as cost oil. What remains is divided 50/50 with Guyana. That 50% profit oil plus the 2% royalty equals 17,100 barrels of oil per day at a production rate of 120,000 barrels per day.

OilNOW understands that there may be other costs which will have to be borne by Guyana, as outlined in the PSA. The establishment of a cost recovery sub-committee is expected to focus heavily on these factors.

The Guyana government has given a commitment to make more details of the PSA public this month.

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