Guyana and its prolific Stabroek Block has often been described as the treasure chest for the oil and gas companies, unlocking US-billions in revenue while only a meager portion of that wealth is shared with the government.
This was glaringly evident in the first nine months of 2024, as ExxonMobil, the operator of the Stabroek Block produced US$14B worth of oil, while Guyana only received US$1.9B of that revenue.
The Natural Resource Fund (NRF) First Quarter Report for 2024 stated that for the period January 1 to March 31, 2024, total deposits were US$455.4M including US$391M in profits and US$63M in royalties.
In the second quarter, deposits totaled US$778.6M inclusive of US$679.8M in profits and US$98.8M.
Meanwhile, in the third quarter, the NRF received US$582.8M comprising US$481.7M profits and US$101M royalties.
This means that the country received approximately US$1.9 billion during the first nine months of 2024.
On the other hand, ExxonMobil and its partners recovered about US$10.5B in costs from the oil produced during the period. In keeping with the terms of the Petroleum Agreement, ExxonMobil also benefitted from 50% profits- US$1.5B.
This means that the oil companies got US$12B while Guyana only received US$1.9B during the first nine months of 2024.
It should be noted that Guyana continues to receive a paltry share from its oil resources as a result of the fiscal terms outlined in the 2016 Exxon deal. The country continues to hemorrhage more of its resources by failing to implement a ring-fencing provision.
A ring-fencing provision would mandate each project to pay for itself. After the cost of the project has been repaid, Guyana is posed to receive 50% of the revenues generated at the project. This means that revenue flow to the NRF would significantly increase.
In the absence of this key principle, ExxonMobil is free to use the revenues from these producing fields to fund projects that are yet to commence production or invest in its exploration activities across the Block.
This year, Guyana could have been receiving 50% of revenues generated by the three projects in operation, since Exxon recovered US$19B at the end of December 2023- more than the combined cost of those projects.
Liza One is pegged at US$3.5B while Liza Two costs another US$6B and the third project Payara carries a price tag of US$9B.
Guyana has been urged by a number of institutions to ring-fence the Stabroek Block to ensure the country benefits early on from the revenues generated from the sector.
The Government has however refused to implement this key provision, arguing that it could slow down the pace of development in the block. In fact, Vice President and Chief Policymaker for the sector, Bharrat Jagdeo had said at a press engagement on October 12, 2023 that the country could be left with nothing in the future should such a provision be implemented.
He reasoned, “We admitted that we are foregoing revenue now in exchange for massive future income because it’s going into new projects that will increase production, and so even with the same share of the 50/50, plus the two percent royalty that the future income, because of the bigger scale will be massive in Guyana’s case and we are deliberately foregoing that in this period for that purpose and then trying to grab this bone now could cause you to lose all the bones, the bigger bones too in the future.”
In the meantime, Suriname has made it clear that its first oil project will be ring-fenced to ensure its people enjoy its full share of revenues.
(ExxonM pumped US$14B in 9 months of 2024 but Guyana only gets US$1.9B)