Guyana will start collecting money from the first barrel of oil drawn

Last Updated on Thursday, 6 August 2015, 21:15 by GxMedia

by Zena Henry

With the significant oil find offshore Guyana, many persons have questioned the contract between Guyana and United States-based oil giant Exxon Mobil, hoping that the country will get what it deserves.

However, at this point the government seems quite satisfied with the current agreement between the two entities.

Minister of State Raphael Trotman told Demerara Waves Wednesday August 6, during a Cabinet press briefing that the oil company and Guyana currently have a ‘production sharing agreement”, which means “that from the first barrel of oil that is produced, Guyana will get a share instantly.”

The Minister said there are other forms of agreements that allow for net profit, “but the standard agreement that we are using in this sector is the production sharing agreement. It means from the first barrel, regardless of what the operating expenses are, government and the people will benefit.”

Trotman did not go into detail on the actual percentage to be shared or the specifics on how the calculations will be done. When asked, he said, “Yes, I believe that we have in the context of all that is happening, a favourable agreement.”

When the oil talk grew under the former administration, local stakeholders had expressed concerns to ensure that Guyana makes the right decisions for optimum benefits so that the country does not become an ‘oil rich poor economy.’

There was even loose talk that Guyana did not stand significantly benefit from the oil find. Trotman reiterated however that the government is currently satisfied and is working with its agreement with the oil company.

The United States has been pushing for a transparent system to be put in place to manage oil revenues for the benefit of Guyana.

The Guyana government has committed to set up a sovereign wealth fund to deposit and manage revenues from extractive industries for the long-term benefit of the country.