Dear Editor,
When Guyana’s oil contract was signed in 2016 world market prices per barrel averaged $65. All indications today are that future prices (next 5 -10 years) may average $110. The portion of higher average price ($110 minus $65 = $45) can be called the Russia-Ukraine war premium.
Who gets to keep most of the $45 premium? Should Guyana and Exxon share in the war-premium equally? Should it remain at the per contract rate of 14.5% for Guyana (profit share 12.5% plus 2% royalty)?
Guyana is the owner of the resource. Where is Guyana’s sovereign ownership’s rights reflected in this contract? It is time for the Government of Guyana to contemplate this question – and negotiate for at least 50% or 100% of the premium price per barrel of crude produced in Guyana.
This is from the NYT of April 29th:
“Exxon and Chevron report huge jumps in first-quarter profits. Thanks to rising energy prices, profits at Exxon doubled, to $5.5 billion, and it would have been bigger if not for a $3.4 billion hit from quitting a Russian operation. Chevron, which has less exposure to Russia than rival oil giants, saw its profit nearly quadruple, to $6.3 billion”.
The current world crisis created by Russia’s invasion of Ukraine presents an opportunity for money making for both Oil Companies as well as Oil-host countries, but that assumes the Government of Guyana is of the mind-set to ask for renegotiation of the Oil Contract. Guyana’s oil resource is finite – and a world opportunity presents itself only rarely. The Government of Guyana should seize this opportunity to press its demand for a Fair Contract.
Yours faithfully,
Mike Persaud
