Where in the Stabroek petroleum agreement is it stated that the oil companies receive 98% of revenues per month?
On Thursday November 7th, 2019, the press reported that the Exxon will take the first three liftings of oil. The press indicated each lifting is one million barrels. Assuming oil price per barrel of US$60, the total value of oil removed from Guyana’s waters will be US$180 million.
In the press report, it stated Guyana would only receive 2% of the revenues from these first 3 liftings. That is about US$3.6 million.
But what doesn’t compute is the implied cost of 98%.
According to the contract, the cost should only be a maximum of 75% of revenue per month. Then, there is the 50/50 profit sharing.
If oil extraction is projected to start in December and Guyana’s lift of oil is slated for March, then the 2% paid to Guyana seems to contradict Article 11 section 11.3 of the Stabroek Petroleum Agreement.
Here is the snippet from Article 11: “All Recoverable Contract Costs incurred by the Contractor shall, …, limited in any Month to an amount which equals seventy-five percent (75%) of the total production from the Contract Area for such Month excluding any Crude Oil and/or Natural Gas used in Petroleum Operations or which is lost.”
A searchable copy of the contract can be found here: http://www.oggn.website/wp-content/uploads/2019/08/Oct2016-Petroleum-Agreement.docx
That should mean Guyana receives a minimum of 14.25% per month. Can the Government of Guyana explain if, when, and how we would receive the missing 12.25%, about US$22.5 million, on these first 3 million barrels of oil?
The optics of these first extracts gives the impression the oil is owned by the oil companies not Guyana.
The Government of Guyana should indicate where in Stabroek Petroleum Agreement it states that the oil companies receive 98% of revenues in any month?
When an entity takes a 98% share of the pie for all reasonable purposes it is theirs. Is the oil ours or the oil companies?
Darshanand Khusial
