Petroleum Sharing Agreement Guyana
Such a decision could be delayed, however, as reports indicate that the government will appoint a former premier of the Canadian province of Alberta, Alison Redford QC, to review Exxon`s Payara project and discuss how to proceed. However, Exxon has made it clear that the Guyanese portfolio is certainly one of its best chances, but not the only one. “If we don`t get the deal as it`s sought in Payara, the investment money will go elsewhere in ExxonMobil`s portfolio. I just don`t want it to be such a different contract from everything else we can potentially invest in,” said Alistair Routledge. As soon as the government gets its share of the country`s crude oil, it will try to sell that oil to traders through oil sales agreements. Data on these agreements are very important for monitoring – including, for example, the identity of the buyer, the annual and monthly quantities of oil that can be purchased and sold, the price to be paid and the mechanisms for price adjustment. Oil prices can have a significant impact on oil-dependent economies and open data are essential to controlling revenues and their spending. At a time like this, when the sharp drop in oil prices is driving entire savings in life, the need for transparency is more evident than ever. Three days before the discovery was confirmed, a production-sharing agreement (PSA) was signed between the government, ExxonMobil, CNOOC International and Hess, completing the exploration agreement already signed between the parties. In December 2017, the government made the agreement publicly available, which was seen by its citizens as an important step in treaty transparency. Oil-sharing agreements (IPIs) are among the most common types of contractual agreements for oil exploration and development.
As part of an EPI, the State, as the owner of mineral resources, assigns a foreign oil company (FOC), as a contractor, to provide technical and financial services for exploration and development activities. The state is traditionally represented by the government or one of its agencies, such as the national oil company (NOC). Guyana is one of the last oil producing regions in the world and made the first commercial draw of crude oil in December 2019. Crude oil is sent abroad for refining. Production in the Stabroek block began in December 2019 and exports began in January. That same month, the Ministry of Energy signed a sales contract with Shell to sell the first three lots of oil for profits received by the country. In January, the first million barrels of oil were shipped. However, the price of the oil sold is unknown, as the sales contract has not been made public.
A recent OpenOil analysis of the treaty suggests that “Guiana will receive up to $55 billion less than should be the case with the Stabroek licence; $1.3 billion a year on average. In response to the Open Oil report, Exxon noted that “the findings are misleading because they compare Guyana`s deep waters to those of mature hydrocarbon producing provinces, which naturally reflect fiscal conditions that reflect maturity and lower risk profiles.” The government said the agreement was not only about tax conditions, but also about “geopolitical and national security constraints that cannot be ignored.” Despite falling prices, major oil traders continue to be interested in Guyana. They are still expressing interest in being considered marketing agents by the government in the country`s crude oil.