‘We will not take advantage of Guyana’ – ExxonMobil

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By Neil Marks

ExxonMobil says the petroleum agreement with Guyana is a fair one and the company has committed not to exploit the country for its massive oil wells offshore.

“Absolutely, it’s a fair deal,” said Rod Henson, Country Manager of Esso Exploration and Production (Exxon’s local subsidiary) on Thursday, 28 December 2017.

“I think we’ve been treated fairly and I think we have treated Guyana freely,” he added at a press briefing held at the Marriott Hotel in Georgetown.

In March 2020, ExxonMobil and its production partners are expected to begin bringing up oil from 17 wells offshore Guyana.

The first phase of its operation will run for an estimated 20 years; at the end of it, Guyana’s revenues would amount to some US$7 billion, Henson said.

The revenue was calculated based on crude forecast of US$50 per barrel and considers 2% royalty and Guyana’s half of profits after production cost is recovered.

Rod Henson, Country Manager of Esso Exploration and Production

“We don’t take advantage of countries or partners,” said Henson.

“We’ve been in business 130 years; our reputation is very, very important to us. “We want to look back on Guyana and say this has been a very positive experience,” he added.

ExxonMobil holds 45% interest in the Stabroek oil block, which is located some 100 miles offshore Guyana and measures 6.6 million acres. Other partners are Hess (30%) and CNOOOC Nexen (25%). The companies estimate they can source up to 2.7 billion barrels of oil.

The Government today released the petroleum agreement with the three companies; Exxon said it was committed to transparency but took the lead of the Government in not revealing details of the contract.

According to the agreement, the companies have permission to operate for an initial four-year period with two extensions which will both last for three years.

The agreement provides for the companies to relinquish 20% of the contract area at the end of the first renewal period.

The Minister responsible for the petroleum sector will have to review the companies’ exploration work programmes and budgets, development plans and audit rights. The Minister will also be responsible for ensuring accounting procedures are enforced.

The Government may request that the companies market the Government measured share of crude with an agreed process to negotiate marketing fees that are competitive, fair and transparent to the government.

According to the agreement, the company will pay US$1 million in an annual fee and will provide US$300, 000 for training and US$300, 000 for corporate social responsibility projects.

Minister of Natural Resources Raphael Trotman told the National Assembly this month that the 2% royalty will give Guyana US$380 million per annum. A US$18 million has already been paid to the government.

Henson argued that the agreement was fair to Guyana as a new country joining the oil industry and he further argued it would be unfair to cherry-pick parts of the petroleum agreement and compare it to mature oil-producing nations such as Brazil, the United States, Canada or those in Africa.

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