The Guyana government believes the US$18M signing bonus it received from ExxonMobil – part of a modified 2016 Production Sharing Agreement (PSA) – is relatively high given the risks involved and the fact the country is still not a proven petroleum producer.
The country’s Minster of Natural Resources, Raphael Trotman, shared this view in a brief to a gathering of the country’s top legal luminaries including the judiciary’s Chancellor (ag) Yonette Cummings Edwards and Bar Association President, Kamal Ramkarran.
The forum; the opening of a two-day training conference held by the Guyana Bar Association (GBA) saw the South American nation’s top Attorneys-at-Law “Exploring the Legal Framework in Oil and Gas Law.”
Mr. Trotman told the attorneys, “not because you have found oil your basin is de-risked…when you start to produce oil and you can prove that, that production is sustained and not under threat or hindered in any way then you can say we are a producing nation.”
Providing a candid brief to the country’s top legal minds and special invitees, the Guyanese Natural Resources Minister, in defending the quantum of the signing bonus, pointed to a review of the PSA conducted by the International Monetary Fund (IMF) in March 2017.
Quoting the report, Mr. Trotman said the IMF found the US$18M signing bonus is “relatively high for a new petroleum producer.”
He said the IMF report indicated, “High signature bonuses are more common in mature jurisdictions in which the petroleum resources have already been de-risked.”
According to Mr. Trotman, while “some people say we should have had US$5B, some say hundreds of millions, we have, as I said, a different overview…not because you have found oil your basin is de-risked.”
He drew the attorneys attention to the claims by Venezuela over Guyana’s territory in the context of the oil find and signature bonus saying, “a country next to you has said what you have is theirs, so you can have it in the ground, but if you can’t touch it, its value is zero to you.”
The Guyanese Bar and Judiciary was told by the Government Minister – himself an Attorney-at-Law – not just because you have found oil you have a right to high bonuses. “…at this point in time we are a nation of great potential, we now wish to turn that potential into prosperity