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ExxonMobil could very well consider it prudent to pay taxes to GRA

Jun 15, 2025 Letters

Dear Editor,

Kaieteur News – I am not anti-ExxonMobil – far from it – for I readily acknowledge the fact that without ExxonMobil (EMGL) and its partners Hess and CNOOC, Guyana would have remained the unknown backwater whose nationals, and the rest of the Caribbean, were the only persons who recognized Guyana’s potential. It took big faith and big money to realise that potential – and that is where the EMGL relationship is doing wonderfully for Guyana, which is undergoing a massive infrastructural development that will soon be boosted when the gas to energy project comes on-stream. Guyana today is known worldwide.

The contract (PSA) that governs the relationship between the Government of Guyana (GoG) and EMGL, has been the subject of severe criticism by both local activists and foreign observers. Our government has held firm against strident calls to renegotiate the contract whereas EMGL asserts that it won’t do so. The GoG’s position is correct for two reasons: any re-negotiation cannot be unilateral and the established legal principle of sanctity of contracts must be recognised for good business going forward.

That business is business is simply reality, and parties entering into business deals will exert as much leverage as they can to achieve the best bargain. However, some of the terms of the PSA go beyond just ‘a good deal’ in EMGL’s favour. One such term is so repugnant that it is reminiscent of the type of term that would be caught, given the right legal context, by the Unfair Contract Terms Act, 1977, a United Kingdom statute which addresses contractual terms that exclude liability or impose unreasonable obligations that unduly favour one party. That Act does not apply to the 2016 contract between GoG and EMGL.

I found reading KN’s news story (Jun 11) about EMGL’s Company Report particularly galling. Tax breaks and tax exemptions are standard incentives for attracting foreign business – but I do not know of a single company other than EMGL, operating in Guyana, that has its taxes paid by the GoG to the GRA. Is that done in reality or is it an administrative fiction? The report says Guyana paid $260B (USD1.2B) in taxes to GRA on EMGL’s behalf in 2024. Article 15.5 of the PSA provides that the Minister responsible for petroleum shall furnish proper tax certificates evidencing EMGL’s payments of income and corporation tax respectively.

The GoG is thus contractually bound to facilitate ExxonMobil’s avoidance of US taxes – by a complete fiction apparently – for not only has the Guyanese public been offered no proof of such payments to GRA, but moreover the very concept is ludicrously unfair and wholly repugnant. The world’s biggest oil company thus made in 2024, $1.255 trillion (USD6B) from its Guyana operations, had $260B (USD1.2B) in Guyana tax effectively waived and furthermore did not pay US taxes that would otherwise have been due to the IRS but for Article 15.5 of the PSA.

EMGL is unlikely to simply experience an epiphany of corporate conscience and agree to pay GRA taxes it is not contractually obliged to pay. Should the Minister, however, decline to participate in a fiction that wholly and solely benefits EMGL with no reciprocal gain accruing to Guyana, it is doubtful that EMGL would get very far in a claim for breach against the GoG in response to such ministerial action. Arbitration could possibly support EMGL and will be costly – however the costs would be well worth it if an arbitration finding in favour of that odious term is subsequently taken before the High Court by the Government of Guyana. Aware of this, ExxonMobil could very well consider it prudent to offer to pay some amount in taxes to GRA and thereby earn legitimate certificates to present to the US tax authorities.

Yours truly,

Ronald Bostwick

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