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ExxonMobil gets generous tax concessions; Guyana stands to earn US$7.5 billion in 20 years

Minister of Natural Resources, Raphael Trotman addressing an event to officially release the agreement between government and ExxonMobil and its partners.

ExxonMobil, along with its partners, that is preparing to begin commercial oil production in early 2020 at the Liza 1 Field offshore Guyana have been granted very generous tax concessions, even as both parties are touting the hefty earnings that the country will make in 20 years from one field alone.

The 2016 Petroleum Agreement states that Esson Exploration and Production Guyana Limited, CNOCC Nexen Petroleum Guyana Limited and Hess Guyana Exploration Limited as well as companies which are working for them in Guyana are exempted from a range of taxes and duties. “No tax, value added tax, excise tax, duty, fee, charge or other impost shall be levied at the date hereof or from time to time thereafter on the contractor or affiliated companies in respect of income derived from petroleum operations or in respect of any property held, transactions undertaken or activities performed for any purpose authorised or contemplated,” states the document.

The contract, which was released after intense public pressure, however, provides for the company to pay import duties, income taxes and other taxes on services provided other than those related to petroleum services under the agreement, rent due to the government for land rights, local government rates and taxes, and a range of miscellaneous fees.

The contracting companies, affiliates, contractors and sub-contractors as well as their staff must pay income and corporation taxes.

Further, the agreement prohibits the government from levying or demanding any additional monies in the future. “After the signing of this agreement and in conformance with Article 15, the government shall not increase the economic burdens on the contractor under this agreement or by applying to this agreement or the operations conducted thereunder any increase of or any new petroleum related fiscal obligation, including, but not limited to any new taxes whatsoever, any new royalties, duties, fees, charges, Value Added Tax or other imposts,” states the accord.

With regards to import duties, the government has committed to ExxonMobil, its partners, and sub-contractors engaged in petroleum operations to waive all duties, taxes and other imposts on all equipment and supplies except food and alcoholic beverages. The company is also exempt from paying export duties on such items that have been brought into the country for petroleum operations.

Delivering remarks at the official disclosure of the contract in the presence of members of the business community, government ministers and trade unionists, Minister of Natural Resources Raphael Trotman said the overall oil and gas operations could see Guyana earning US$80 billion in years to come from the more than 3.2 billion barrels of oil that have been discovered so far in the Stabroek Block by ExxonMobil.

Trotman said when commercial oil production begins, Guyana would earn at least US$1 million daily or just over US$300 million annually.

 

ExxonMobil’s Country Manager, Rod Henson told the event held at the Ministry of the Presidency that from the Liza 1 Field Guyana would earn about US$1.5 billion after five years and US$7 billion over a 20 year period- all at an estimated US$50 per barrel of oil. Henson noted that his lawyers have advised him to point out that while those figures are guaranteed, they are based on price assumptions.

The revised agreement provides for an increase in the annual rental fee from US$240,000 to US$1 million; training has increased from US$45,000 to US$300,000 and a new allocation of US$300,000 for social and environmental programmes as well as a 2% royalty.

Henson noted  that 75 percent of the earnings would for the first four years be set aside for cost recovery and then that would significantly decline to cater for recovery and operational costs.

  • ExPPP_Man

    About 350 million USD per year for Guyana, what will Exxon get in return ? This deal smells awful as the AFC/APNU.

    • Col123

      PPP man…Abee gon get rich…you just zealous…Hey…Seasons greetings guy..and a Healthy, Happy 2018…

  • rudeo

    Give away if our national patrimony….oh boy….bonanza for Exxon…..crumbs for Guyanese….thanks to the haarkaatee who we put in charge….boy o boy….let the games begin

    • Foreigners Fleece Flee Guyana

      baabuu d harkatee et al got less dan 10 per cent votes

  • omar amin

    3.2 billion barrels of oil at
    approximately US$50 per barrel is equal to US$160 billion. Somebody scream!!!!!

  • Rose Bird

    Back to colonialism. We must demand all utilities to be free of costfor each Guyanese. Now!!!

  • powerplayer

    This could have been so simple. What other countries get in return for their oil is public knowledge in this computer age.

    Having a group of qualified folk to do the research gather the information and present it to the powers to be would have taken humbleness. You the powers to be owe it to us the people of this country to humble yourselves.

    Say I don’t know I need guidance put brains to work. At the end of the day you are still the leaders.

    Poverty of the mind and body is serious business. One must be able to humble themselves and admit they need help with their vision of a bright future.

    We as Guyanese people will continue to suffer as we stay within our race culture and religious limitations.

    Please let us learn from this. Our leaders went to the finals ill equipped and this is the result

    We haven’t loss what we never had We acted like plebs and we were treated like plebs.

  • GuyanaTheHellholeFailedState !

    who is gonna monitah production and exports per shipload
    wat happens if hoile falls below US$50 a barrel
    looks like guyana is giving away more in concesssions dan they will eva receive

  • afc=kfc=uf=dead meat in 2020 !

    was d US$18M worth d 10 years contract renewal ????

  • Parbudin Mackanlall

    Grateful if Rudeo, ExPPP Man and Col123 could put up figures that they think would reflect a better deal. These figures could be accompanied by suitable explanations for those of us who do not share their superior intellect. They could also highlight the practical benefits of leaving the oil in the ground. This should not pose a problem, after all these learned gentlemen would not criticise something unless they know what the genuine article should be like. Or would they??

    • Col123

      Boy…you stupid or what?….where have I criticized this deal in any past or present comments, as it related to the finances involved?…quote me some..My comments in the past reflected the underlying position of Exxon, intent as it relates to foreign American holdings in Venezuela, and the potential strategic plan involving the US foreign influence…based upon my experience . Quite recently, I have seen other commentators, in the media, pointing out those similar concerns….it’s a new Year padna. Have a Healthy and Safe 2018!

      • ExPPP_Man

        Is which Mac-and-Lall this, the one who was detective ? Dis bai prapra stupid fuh real.

  • 1 TERM GOVT.

    GREEN TABLE CLAATH = pnc paramountcy