The US$18M signing bonus that ExxonMobil paid the Government of Guyana upon the signing of an updated Production Sharing Agreement (PSA) in 2016 will not be cost recoverable by the US oil major.
This means that in computing costs when production begins in 2020, the US$18M will not be categorized as such by ExxonMobil and therefore would not be deducted from any of the oil proceeds.
This is according to Guyana’s Minister of Natural Resources Raphael Trotman who today answered questions from the media on yesterday’s ExxonMobil/Government of Guyana contract disclosure. He was at the time hosting Government’s post-Cabinet media briefing jointly with Minister of State Joseph Harmon.
“It is a bonus…it is not part of the profits and therefore it would not be deducted at a later stage,” said Trotman.
The signing bonus has its basis in Article 33 of the PSA, which says that the “Contractor shall pay the Government a signature bonus of $18 million US dollars.” It said too that the money had to be paid within 15 business days after the effective date, or such date as agreed by the parties and that it will be paid into a bank account owned by the Government of Guyana at the Bank of Guyana.
The payment of a signing bonus became the latest hot topic in an ongoing saga of controversy regarding the Government’s handling of the new and developing petroleum sector. Government has made it clear that the money will be used to finance Guyana’s legal battle against its neighbor to the west – Venezuela, which upon the announcement of the first discovery in 2015 laid claim to the Stabroek Block.