Using Dr Mangal’s royalty and profit sharing figures, we calculated Guyana is giving away $US 23 billion to Exxon under the current contract.
This is based on oil price of $US 80 a barrel and 3.2 billion reserves. We used the upper range of Dr Mangal’s royalty range which is 20%. The reason for the 20% royalty is the quality of the oil, a location that significantly reduces the need for expensive security, the distance to the US refineries etc. We kept a 50/50 profit sharing in place. We did not factor in economies of scale in this calculation which would further increase the amount Guyana is giving away. The calculation details are posted below.
Original article on Dr Mangal’s comments can be found at this link.
Last week, OGGN looked at the contract from the perspective of what Exxon would find acceptable. We used Exxon’s historical financial records and the calculation was more involved as we reversed engineered the NPV and IRR from the IMF report. That calculation showed that Guyana gave up $US 29 billion more than was necessary. You can find the details of the calculation in the link below.
http://www.oggn.website/2018/01/29/guyana-loses-out-on-us29-billion-from-oil-deal/
