Guyana received $336B in 2023 from oil, and had to pay $306B in taxes for ExxonM and partners

Sep 13, 2024 News

President Irfaan Ali

Kaieteur News – For 2023, the Government of Guyana (GoG) had to pay the combined sum of $306 billion in income taxes for ExxonMobil Guyana Limited and its Stabroek Block partners, Hess and CNOOC according to the companies’ audited financial statements, while for the same period Guyana earned $336 billion from its oil.

President of ExxonMobil Guyana Limited (EMGL), Alistair Routledge

This arrangement which saw the Government paying almost the same amount it earned from oil, in taxes for the oil companies last year is as a result of the 2016 Production Sharing Agreement (PSA) the previous Coalition Government signed with the U.S oil major. Exxon is the operator of the Stabroek Block, with 45% interest, Hess Guyana Exploration Ltd. holds 30% interest and China National Offshore Oil Corporation (CNOOC) Petroleum Guyana Limited holds 25% interest. Last year, the three companies earned $1.3 trillion in profits – entirely tax-free in Guyana. However, while Exxon, Hess, and CNOOC are not required to pay taxes, the 2016 oil contract provides for the taxes to be paid to the Guyana Revenue Authority (GRA) by the Government out of its share of profit oil.

According to the PSA, the Stabroek Block partners are allowed to recover 75% of the oil produced to recover their investment costs, the remaining 25% is considered profit, which is split between Guyana and the Stabroek Block consortium, giving each 12.5%. However, the consortium pays a 2% royalty from its share to Guyana. From its 14.5% Guyana then has to pay taxes for the oil companies.

Notably, the provision of the Stabroek Block contract which gives Exxon and its affiliates a tax-free ride in Guyana has attracted criticisms locally and internationally. The contract states in Article 15.1 that the Contractor (ExxonMobil Guyana Limited) as well as its affiliates shall not be subjected to tax, value-added tax, excise tax, duty, fee, charge, or impost in respect of income derived from petroleum operations, property held or transactions except as specified under the agreement.

It goes on to state in Article 15.4 that the sum equivalent to the taxes owed by the company will be paid by the Minister responsible for Petroleum to the Commissioner General of the GRA. It should be noted that the contract also allows for the issuing of a receipt to ExxonMobil, indicating that it has met the local tax requirements to avoid the burden of double taxation. Article 15.5 of the contract states, “Within one hundred and eighty (180) days following the end of each year of assessment, the Minister shall furnish to Contractor proper tax certificates in Contractor’s name from the Commissioner General, Guyana Revenue Authority evidencing the payment of the Contractor’s income tax under the Income Tax Act and corporation tax under the Corporation Tax Act. Such certificates shall state the amount of tax paid individually on behalf of Contractor or parties comprising the Contractor and other particulars customary for such certificates.”

The Irfaan Ali-led administration has explicitly stated that due to the sanctity of the contract, the 2016 PSA will remain in place, despite the deal being labeled as ‘lopsided’. In fact, last year, President Ali, during an interview with British Broadcasting Corporation (BBC) Senior Journalist Gideon Long, reiterated his administration’s position to not renegotiate the ‘lopsided’ Exxon deal. President Ali said, “Well, I would say definitely, we did not have the best of deals, Exxon had a good deal signed by the last government.” Ali then highlighted that the sanctity of contract is “very important” to his government, adding, “and we can’t go back on that.”

It should be noted that a legal suit brought against these abusive tax giveaways by the Publisher of this newspaper, Mr. Glenn Lall was unsuccessful as the Court dismissed the case in February 2023.

• CNOOC, Exxon, Government, Guyana, partners