Jul 08, 2022 News
…collected US$21.2M in first year, pays US$27.5M to GRA for oil companies
Kaieteur News – Guyana under the production sharing agreement with ExxonMobil Guyana agreed to pay among other things, the income taxes to be paid by the oil companies and as such in the first full year of production, accumulated payments to the Guyana Revenue Authority on behalf of those companies amounted to $5,751,060,980 or about US$27,552,901.83.
The country in 2020 collected some US$184.9Million in profit and US$21.2Million in royalty for a total of US$206M.
As such, it would mean that government agreed to pay to the GRA, more money than it received in royalty payments for that year to be turned over to the tax authority representing payments made on behalf of the oil companies. According to the Financial Statements filed, Hess Corporation listed as its Income Tax expense, some $G1,725,318,294 or US$8.3M for its 30 percent interest in the Stabroek Block. As such, it would bring the total amount owed to GRA to be G$5.7B or about US$21.2M meaning ExxonMobil’s 45 percent interest would rack up payments of some G$2,587,977,441 or US$ 12.4M and CNOOC petroleum Guyana Limited G$1,437,765,245 or US$6.9M on its 25 percent interest in the Stabroek Block.
Under the PSA at Clause 15.4 (a) it stipulates that the Minster of Natural Resources agrees that a sum equivalent to the tax assessed to be paid by the Minister to the Commissioner General of the Guyana Revenue Authority (GRA) on behalf of the contractor—ExxonMobil Guyana – and that the amount of such sum will be considered income of the contractor.
Additionally, at 15.4 (b) the Minister also agrees that the appropriate portion of the Government’s share of profit oil delivered, shall be accepted as payment in full for the contractor’s share of Income Tax and Corporation Tax—levies owed to the GRA.
This year, Minister within the Office of the President, with responsibility for Finance, Dr. Ashni Singh, has predicted that Guyana will be collecting some US$957M this year—US$857 being profit and US$100M being royalty. ExxonMobil partner in the Stabroek Block, John Hess, Chief Executive Officer of Hess Corporation recently pegged earnings from the oil block this year to be some US$2.6B for its 30 percent stake in the operations.
The Stabroek Block is currently being developed by two Floating Production Storage and Offloading (FPSO)—the Liza Destiny and Unity and the Liza I and II developments—and collectively the oil companies are set to rake in just under US$9B.
The Liza Phase I development, which began production in December 2019 utilising the Liza Destiny FPSO with a production capacity of approximately 120,000 gross barrels of oil per day, recently completed production optimisation work that expanded its production capacity to more than 140,000 gross barrels of oil per day.
The Liza Phase II development, utilising the Liza Unity FPSO, began production in February 2022 and is expected to reach its production capacity of approximately 220,000 gross barrels of oil per day by the third quarter. The third development at Payara is ahead of schedule and now expected to come online in late 2023, utilising the Prosperity FPSO with a production capacity of approximately 220,000 gross barrels of oil per day.
The fourth development, Yellowtail, is expected to come online in 2025, utilising the ONE GUYANA FPSO with a production capacity of approximately 250,000 gross barrels of oil per day. At least six FPSOs with a production capacity of more than one million gross barrels of oil per day are expected to be online on the Stabroek Block in 2027, with the potential for up to 10 FPSOs to develop gross discovered recoverable resources. Guyana’s Stabroek Block is 6.6 million acres (26,800 square kilometres). ExxonMobil affiliate Esso Exploration and Production Guyana Limited is the operator and holds 45 percent interest in the Block. Hess Guyana Exploration Ltd. holds 30 percent interest, and CNOOC Petroleum Guyana Limited holds 25 percent interest.
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