Feb 07, 2021 News
Kaieteur News – When Guyana discovered large reserves of oil in the Stabroek Block in 2015, Guyanese saw the golden opportunity for the government, through robust fiscal provisions, to reap billions of United Stated (US) dollars from its new resource. Instead, what the former A Partnership for National Unity + Alliance For Change (APNU+AFC) regime did was sign one of the worst oil contracts in the world with ExxonMobil, thereby seeing the potential loss of US$50B in the lifetime of the Stabroek Block agreement.
And that is just with the Stabroek Block. There’s also the giveaway of the Kaieteur and Canje Blocks, with unproven reserves of 12 billion barrels oil equivalent.
Even with high-quality oil that is coupled with a low breakeven cost, it is clear that the Guyanese government did not cease the opportunity to capitalize on its petroleum resources.
This mismanagement, however, is one that Suriname promises to steer away from, as the Dutch-speaking country used Guyana’s discoveries to demand “harsher” fiscal provisions from oil companies looking to explore and produce oil in their country. By demanding better terms, Suriname is securing a better life for its citizens and future generations.
Revealing these impressive details is the Managing Director and Chief Executive Officer (CEO) of Suriname’s Staatsolie, Rudolf Elias.
During an interview last Thursday on Kaieteur Radio’s Guyana’s Oil & You with Senior Journalist Kiana Wilburg, the CEO indicated that when Guyana struck oil, Suriname “automatically knew” that oil would be found in their land as well. This is because the two countries share a source rock, or the Guyana-Suriname Basin.
Against this Elias articulated, “We were lucky that Guyana found oil. Because of the fact that Guyana found oil in the source… in the deep parts, we said ‘Hey, we also have these deep parts.’ And so a lot of companies got interested again, even though we had harsher fiscal terms.”
These “harsher terms” Elias referred to, ensured that Staatsolie leaves no stone unturned when it comes to securing benefits for his country, he said.
He stated that if oil companies wish to look for oil, it has to cover all exploration expenses. This is dissimilar to Guyana’s deal with ExxonMobil, which states that we have to stand all exploration and production costs that total to billions of US dollars.
When oil companies find the oil, Elias went on to share that Staatsolie is set to receive a 20% participating interest with the companies as a way of monitoring all costs, and to also ensure a transparent process. In the beginning, the CEO recalled, their participating interest was just 10%, but when Guyana found oil discoveries one after the other, the Dutch-speaking country increased its stake to 20%.
“Companies also have to pay a certain amount of profit oil, and that’s besides the 6% royalty they have to pay and the 36% in taxes. So, in the end, we had very harsh fiscal regimes,” he stated.
These percentages are in stark contrast with Guyana’s, which states that Guyana only collects 2% in royalty, that is coverable; and as well as the fact that Exxon does not pay taxes since Guyana has offered to pay their side of the taxes.
The Managing Director shared that Guyana would be wise to establish a national oil company that will be a partner of the people and be part of the oil projects offshore to ensure the prudent management of the lucrative sector. Should the government move in this direction, he advocated the need for proper capacity building. He said this cannot be done in Government Ministries and Institutions alone.
The Managing Director stressed that the capacity to address commercial aspects of the oil industry must not be overlooked. Elias said, “The basis of dealing with the oil companies should always be commercial because at the end of the day, we must ensure that we get as much money as practically possible for the people; and the government should have policies guiding spending.”
He concluded, “Guyana should start building knowledge for a NOC because when you start building capacity you make better deals with the international oil companies and you are able to better understand what they are doing.”
Guyanese you are being prostituted by your politicians!
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