– oil giant rakes in billions without producing a single barrel – Nigel Hinds
The fact that Guyana will begin to reap benefits from royalties and profit from oil only after ExxonMobil beings production is reason enough to ensure that a production timeline is in the Production Sharing Agreement (PSA) that the country signed with ExxonMobil.
This was noted recently by Chartered Accountant, Nigel Hinds.
Hinds said that with each discovery of oil ExxonMobil makes offshore Guyana, the company reaps good financial benefits on the stock market.
He said that it is normal for a production timeline to be set in the PSA.
“Otherwise, Exxon could continue at infinitum with their exploration of the 6.6 million acres making up the Stabroek Block.”
Hinds said that while Guyana will be desperate to start receiving royalties soonest; “ExxonMobil will have other variables to consider; thus the reason why a production timeline is normally in the PSA. But, of course our unflappable negotiators neglected to include a production timeline in the PSA. The production date seems to be solely at Exxon’s discretion.”
ExxonMobil has already announced that it is poised to begin production by 2020. However, Hinds said that that date is not binding. He said that there have been many cases where oil companies postponed production due to the world market prices not being optimum at the time.
“The value for Exxon is primarily in the increase of their recoverable reserves and a PSA that favours them, unlike any other PSA ever recorded on this planet,” said Hinds.
Hinds also noted that ExxonMobil held its 2017 Q4 conference call on February 2, 2018 and Guyana was by far the country most mentioned by Jeff Woodbury, Vice President and Investor as he presented the 2017 Q4 update and took questions from the analysts. “Exxon representative seemed euphoric during the conference call, about their reserves and prospects in Guyana.”
Exxon has made six discoveries in the deep-water offshore of Guyana. Associated recoverable reserves are now up to 3.2 billion Barrels of oil equivalent.
Exploration in Guyana’s offshore is in an early stage and it is much more probable than possible that Guyana’s recoverable oil reserve will exceed the Ten Billion mark.
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