Producing statistics and calculations to show that Guyana has an oil deal far below global standards and will lose out on up to US$55 Billion over the 40-year period of the licence for the Stabroek Block, international corruption watchdog Global Witness has written to ExxonMobil urging a renegotiation.
“Exxon should renegotiate the Stabroek license so that Guyana obtains a fair deal,” a letter written by Senior Campaigner of the NGO, Jonathan Gant to ExxonMobil’s CEO Rod Henson stated as he asked the company to respond to a number of statements from an analysis done.
The data, according to Global Witness, will be used as it compiles a report on this country’s oil sector, which is to be published soon.
Global Witness had written to the company last month and had gotten a response but said that with the recent announcement of ExxonMobil’s 16th discovery and its upped estimate of reserves of over 8 Billion barrels of oil equivalent, it needed further clarity for updated analysis.
“We would welcome your comments on the following statements. If any are inaccurate, we would be grateful if you would say in what way,” the letter states.
It explained that it had hired the Berlin-based financial analysis and commercial advice organization OpenOil to undertake an analysis for it and it is from those findings that it wanted the company to address some areas of concern.
“OpenOil has analysed what revenue Guyana will receive if Exxon produces its current estimated 7.9 billion barrels of oil. OpenOil is a company that produces natural resources financial analyses and conducts training for governments and organizations. OpenOil has used data provided by Rystad and Exxon’s public statements and assumes a price of US$65/barrel. According to OpenOil’s analysis, the Stabroek licence gives Guyana only a 52 percent share of oil revenues. A 69 percent share would have been reasonable. The IMF states that a reasonable government take for oil projects is between 65 and 85 percent,” Gant stated.
“As a result of this deal, Guyana will receive an estimated US$168 Billion and not US$223 Billion. Guyana will lose out on up to US$55 billion over the 40 year life of the license. In 2018, the IMF reportedly stated that Guyana’s oil licenses ‘enjoy royalty rates well below what is observed internationally’. In 2018, OpenOil stated that ‘Stabroek yields relatively low government take by almost any standard’. This analysis shows that the terms of the Stabroek licence are exploitative and unjustifiably bad,” he added.
Global Witness presents that “Exxon can afford for Guyana to get a better deal”, saying that if the country obtains just 69 percent share of the Stabroek revenues, the lower end of scale of the IMF’s reasonable take, that Exxon would still be able get a return on its investment of 18 percent as per the suggestions.
The PSA between Guyana and ExxonMobil’s affiliate, Esso Exploration and Production Guyana Limited (EEPGL), and partners CNOOC, NEXEN Petroleum Guyana Limited, and Hess Guyana, states that up to 75% of the revenue earned from production could be used for expenses and to recover the companies’ investment. This was estimated at US$5 billion by the year 2020, when production was estimated to begin at the Liza-1 well. The remaining 25% – profit oil – is to be split evenly between Guyana and ExxonMobil.
EEPGL holds 45% interest in the Stabroek Block while Hess Guyana Exploration Ltd has 30% and CNOOC Petroleum Guyana Limited holds the remaining 25%.
