Introduction
Today’s column reviews estimated Government of Guyana (GoG) revenue and related benefits arising from its International Oil Companies (IOCs)-led oil and gas sector. Considered carefully, Guyana’s expected revenue and related benefits are likely to be principally a function of six variables. These are: the fiscal rules that govern the various Production Sharing Agreements, PSAs; the level of petroleum discoveries; the projected daily rate of oil production (DROP); oil and gas prices; existential risks and challenges facing the successful commercial emergence of the sector; the capabilities of the IOCs; and, the industry’s unit cost-price relation.
As readers are aware, the principal elements of the PSA allow for: 1) a signature bonus, US$18 million; 2) a 2% royalty; 3) cost-recovery provisions and production sharing; 4) pay on-behalf income tax provisions; 5) miscellaneous taxes and revenue imposts; 6) rental charges and fees; 7) profit-sharing; and 8) domestic market obligations (DMOs).