Against the backdrop of robust domestic criticism of the agreement reached with ExxonMobil over the sharing of returns from Guyana’s new-found oil wealth, the country could yet stand to earn billions annually, that could push its revenue from oil way beyond current expectations, a Norwegian oil and gas research company is predicting.
The projection by Rystad Energy that the country could earn billions annually from what it describes as ExxonMobil’s “stunning exploration success” is certain to add a new dimension to the heated controversy that has been raging over whether or not the government sold itself short on revenue returns from its agreement with ExxonMobil.
Rystad is forecasting that Guyana’s 600,000 barrels per day (bpd) in production in the next decade will earn the country revenue of US$15 billion annually from oil and gas, pushing it to the position of number one oil producer per capita in the world.
The Company’s Head of Upstream Research, Espen Erlingsen, is quoted as saying that “ExxonMobil’s discovery of the Liza field in 2015 truly put Guyana on the global energy map. After all, costs are paid, around US$10 billion of profit could thus be split between the companies and the government”. Erlingsen added “Rystad Energy estimates that this will give the government 60 percent of the profit from the various projects (government’s take), while the remaining 40 percent will go to international E and P companies.”
The Rystad Energy official reportedly noted an International Monetary Fund (IMF) report asserting that the agreement had been overly “favourable” to Exxon, positing that the country should consider rewriting its tax law though its analysis points to a far less than poor deal, contrary to the view being expressed here among local critics.
According to the Rystad Energy report, ‘frontier countries’, like Guyana (the Falklands, Israel, Mozambique and Mauritania are also listed in this category) that have only recently opened up to Exploration and Production (E&P) activities,- the government take is in the range of 50 to 65 per cent.
The report goes on to state that in order to attract investments from international E and P companies to kick-start their offshore ambitions, frontier countries often need to “sweeten the pot” with favourable fiscal terms. Guyana, Erlingsten is quoted as saying, has followed this pattern, noting that ”in retrospect, one can argue that the government has succeeded in generating the activity they were hoping for.”
“‘The question going forward will be whether the Guyanese government – emboldened by its stunning exploration success over the past three years – will elect to alter its fiscal regime when future licenses are awarded,” the report adds.
Rystad Energy is an independent energy research and business intelligence company that provides various specialist services to clients in the global energy industry across the globe. Its key products include services on energy fundamentals, oil and gas markets, oilfield services and renewables. The company commonly interfaces with energy owners and suppliers, financial professionals, E&P and oilfield service companies, and governments, focusing on global and regional oil, gas, power and renewable energy markets.
