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Exxon says don’t compare Guyana’s contract terms with those of Suriname Oct 15, 2024 News  …Guyana’s deal ‘very successful’ Kaieteur News – Country Manager for ExxonMobil Alistair Routlegde has said that the lopsided contract signed with this country is very successful and cautioned citizens not to compare Guyana’s oil terms with those of neighbouring Suriname. He was at the time addressing the media last Wednesday at a news conference. Admitting that he has seen the comments made about Suriname’s deal in contrast to Guyana’s Routledge said that “everyone wants to say ours is better than yours, but you know at the end of the day all the elements that go into an agreement like this, a Production Sharing Agreement is put together at a point in time reflecting the risk that existed and in order to try and attract investment.” He boasted that the current agreement has been very successful for Guyana as it has been able to attract investment into a basin where no one had made any discoveries and persons should take a step back to reminisce on that aspect. “It derisked the Suriname drilling because discoveries had been made in Guyana by the Stabroek Block coventurers, and we can always cherry-pick that somebody has higher royalty or lower royalty pays this tax or that tax, but it’s about the total amount of revenue that’s generated out of the petroleum agreement that’s really important to the country,” Routledge told reporters. ExxonMobil Country Manager to Guyana Alistair Routledge. He explained that if sufficient investment is not attracted to a country, development cannot happen hence there would not be the same scale of revenue. “So you can have a larger percentage of a small number or you can have maybe a fair share of a much larger number and ultimately that’s more meaningful for the country. That’s where we have to just be careful about people just writing things, and wanting to cherry-pick certain numbers, I don’t think it’s helpful. Ultimately, the analysis that anybody should do which is the agreement delivering value for the country is it attracting the investment that is sought in order to develop the resource.” On October 5th 2024, the Kaieteur News reported that On October 1, 2024, Suriname announced that it has a Final Investment Decision (FID) to develop a production field in Block 58 offshore Suriname. The timeframe for the construction and installation, according to a release from Staatsolie, https://www.staatsolie.com/would take approximately four years. Suriname can expect first oil in 2028. In a video clip, the Managing Director of the state-owned company Staatsolie, Annand Jagesar, compared the contracts of Guyana and Suriname during the announc Vice President, Bharrat Jagdeo ement of the FID. “Guyana, they have 2% royalty, and 50% profit split, no taxes, and here in Suriname, we have like 6.25 % royalty, profit split according to a certain formula, so the higher the oil price the better for Suriname, but the lower the oil price then the contractor gets protected and we have a stabilized tax rate of 36%,” Jagesar said adding, “So you can do the math and the deal is good but of course everybody has to survive in this partnership.” Vice President Bharrat Jagdeo at a recent press conference acknowledged that Suriname has better terms in their agreement than Guyana’s 2016 agreement. Jagdeo’s statement followed the publication of an article by Demerara Waves headlined, ‘Suriname boasts of better oil contract terms than Guyana’. Jagdeo compared Suriname’s royalty rates with that of the new Public Sharing Agreement (PSA) saying that, “So if you look at their royalty rate of 6.2% royalty, we have just put in our new PSA, a 10% royalty rate that’s the new condition but the agreement that they have today is better than the 2016 agreement and we pointed this out many times.” It is important to note that the new PSA referred to has nothing to do with the country’s current deal with ExxonMobil and its partners Hess and CNOOC nor is it related to the lucrative Stabroek Block offshore Guyana. The new PSA will govern the smaller blocks that were part of the recently concluded auction. Furthermore, there have been no exploration activities or discoveries in any of these blocks. Therefore, citizens should be aware that the Stabroek Block arrangement remains the same, Guyana will get 2% royalty and 50/50 profit sharing. Bad deal Meanwhile, to underscore the lopsided nature of the ExxonMobil’s deal with Guyana 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. 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.” Related Similar Articles

Oct 15, 2024 News Kaieteur News- The National Procurement and Tender Administration Board (NPTAB) office revealed that local consultants VHE Consulting (which is a registered partnership between Ramdihal & Haynes Inc; Eclisar Financial; and Vitality Accounting & Consultancy Inc.) have been awarded the contract to conduct the third audit of ExxonMobil’s expenses for the period 2021 to 2023. According to details recently released on NPTAB’s website, VHE Consulting was awarded the project on October 10, 2024 for the cost of $312,642,834. The audit services is a project being undertaken by the Ministry of Natural Resources who had issued a tender earlier in the year for ‘Consulting Services for Cost Recovery Audit and Validation of the Government of Guyana’s Profit Oil share for the Period 2021 to 2023’. The project was initially opened back in March and VHE was among Grant Thorton UK LLP and PKF Barcellos Narine & Company; and M. Sukhai & Company (local) in joint venture with Info Works Solutions Ltd who had submitted bids. According to the ministry’s tender document, the Terms of Reference (ToRs) said the successful consultant is required to conduct a pre-audit analysis; devise an effective audit plan inclusive of an appropriate methodology; execute the audit in adherence to the provisions of the Stabroek Block Petroleum Agreement and applicable local laws, regulations and procedures as well as international good practices and standards. The scope of works also includes conducting verifications of the crude oil valuation pursuant to the provisions of the petroleum agreement for the audit period as well as verifying royalties remitted to the government for the said period. Additionally, the selected consultant will also be required to validate the accuracy of the total government share of petroleum for the period under review, and assessing the impact of the audit on future profit oil revenues. This project marks the third such audit the Guyana Government has embarked on. The first audit was done by a British firm, IHS Markit for the period 1999 to 2017. That audit examined expenses totalling US$1.7B. Auditors had recommended US$214M be contested by the State and while the government has accepted this recommendation, there has been no move to the next step to reclaim the cost. Flashback! Minister of Natural Resources, Vickram Bharrat, handing over the contract to VHE Consulting auditors to conduct the second audit in the presence of Permanent Secretary of the Ministry of Natural Resources, Joslyn McKenzie (DPI photo) Only last week, the oil giant while not budging on their position with regards to the US$214M disputed costs wants the dispute to be settled outside of arbitration. This was disclosed by the company’s Country Manager, Alistair Routledge on Wednesday at a press conference at their Duke Street head office in Kingston Georgetown.  Routledge was asked by a reporter, “Could you say if ExxonMobil is proceeding to arbitration over the disputed US$214.4M in cost oil from the IHS Markit audit?” Explaining that the company is continuing to work on the audits and there are ongoing discussions between them and the Guyana Revenue Authority to facilitate the exchange of information he said that while they didn’t have “any specific news to say, I don’t have any intent to call on an arbitration, I don’t think that that’s the right way to get to resolution but at the end of the day it’s laid out in the petroleum agreement, the manner in which to approach this. Ultimately, the next step would be to involve an independent expert and if we can’t resolve that way, there is the provision for arbitration, but arbitration is generally a last resort and quite expensive process.” At a recent press conference, Vice President Bharrat Jagdeo told the media that the Government of Guyana (GoG) will not be engaging in any settlement with ExxonMobil over the US$214M in questionable costs flagged by British auditor, IHS-Markit. Jagdeo was asked by this newspaper whether government has considered settling the dispute with the oil giant given how tedious the process has been and the fact that Guyana will be required to cover the costs of Exxon’s legal defence. To this end, Jagdeo informed that the GoG has been guided by two sets of advisors on the matter that have both recommended that the US$214M sum be returned to the cost bank. This means that the US$214M will be split as profits, which will allow Guyana to receive US$107M while Exxon will enjoy the other US$107M. Consequently, Jagdeo asserted, “I don’t believe there is scope at this stage for settlement especially given the magnitude of reduction.” He explained, “Exxon is talking about moving from US$214M to US$3M and if we settle with that, then it’s only half of that we get and so those figures are not palatable at all.” As such, the former Head-of-Stated noted, “We may have to go to arbitration.” Meanwhile, he told reporters that government has not done an assessment of what the arbitration process would cost. He however pointed out that he believes this is the fittest method. “Given all that has happened, I think you need an independent third party on this. If you settle on any figure, say US$214M with Exxon people will say oh you caved to Exxon, if you settle at US$3M, it is worse so a third party is needed to deal with all of these issues. We should not engage, I think, in any negotiations,” the VP said. The second audit was done by a local group, Ramdihal & Haynes Inc., Eclisar Financial, and Vitality Accounting & Consultancy Inc (VHE Consulting) bolstered by the international support of SGS and Martindale Consultants. That contract valued US$751,000 (GY$156 million). That audit examined expenses totalling US$7.3B covering the period 2018 to 2020. Audits are critical to ensuring that the country was not cheated by the oil companies through the procurement of goods and services from the company’s contractors. This process is particularly important since the oil contract with Exxon provides for the operator to deduct 75% of the monthly revenues generated to clear its expenses. The remaining 25% is then shared with Guyana as profits. Without finalising the audits, Guyana would not be able to reclaim the illegal costs claimed by the oil company. Related Similar Articles

Oct 15, 2024 News Kaieteur News – Attorney General, Anil Nandlall said that there is no legal impediment to Clifton Hicken being appointed substantively as Commissioner of Police although he has reached the age of retirement. In an 11-point statement to the media on Monday, Nandlall referenced clauses from the constitution of Guyana to support his stance. The AG acknowledged that the question has arisen in the public domain and therefore he felt the need to address it. However, last week Vice President Bharrat Jagdeo said he had instructed the AG to look into public concerns as to whether Hicken who has passed age of retirement could still be appointed to the substantive post. Going back to when the Leader of the Opposition Aubrey Norton brought a legal challenge against appointing Hicken to act as the commissioner, he noted that the allegation that President Ali did not comply with the Constitution of Guyana was dismissed, because the Chief Justice confirmed that the president acted lawfully. The AG pointed out that, Article 211(3) of the Constitution provides that the Commissioner of Police shall vacate office when he attains such age as may be prescribed by Parliament. He said Parliament has so prescribed in the constitution (Prescribed Matters) Act, Cap. 27:12. Section 2 of this act provides that the retirement age of the Commissioner of Police is 55 years. Acting Commissioner of Police Clifton Hicken. He argued that, “Section 2 (b) authorises the President to permit the Commissioner of Police to continue in Office but not beyond age 60. The relevant parts of the section reads: “The…Commissioner of Police shall vacate his office on attaining the age of fifty-five: provided that (b) the President, acting on the recommendation of the Police Service Commission may permit a Commissioner of Police who attained the age if fifty-five to continue in office until he has attained such later age not exceeding 60 years, as may before the Commissioner has attained.” Nandlall highlighted that it was a letter from the Police Service Commission dated July 21st 2023 that influenced the extension granted to Hicken who turned 55 on July 22nd 2023 and since his appointment to act as Commissioner, he has been “the Officer-in-charge of superintending and commanding the Guyana Police Force. This indubitable state of affairs aligns with the Constitutional definition of Commissioner of Police: “the officer, however styled, commanding the Police Force” [as per Article 232].” Furthermore, “Article 211 (2) of the Constitution states “…any person appointed to act in the office of Commissioner of Police shall …continue to act until a person has been appointed to that office and has assumed the functions thereof…” Nandlall stressed that in respect of having regards for the relevant provisions of the Constitution and the Constitutions (Prescribed Matters) Act as well as the “relevant factual configuration under review, wherein lies the prohibition against the President appointing Mr. Hicken (substantively) to the post of Commissioner of Police? I conceive none.” Additionally, “To the contrary, the conjoint effect of the relevant provisions of the Constitution and the Constitutions (Prescribed Matters) Act impel to the imminent potentiality of Mr. Hicken being appointed to that Office. The contention, therefore, that he cannot, is an affront to both common sense and law.” Leader of the Alliance For Change (AFC) Nigel Hughes, himself a lawyer on Friday said that the government’s intention to appoint Hicken would be legally flawed. Hughes when asked to speak to the issue by this publication said that a Commissioner can only be appointed if that person was substantively in the post before they retired from the Force. “I don’t believe you can appoint a commissioner who was granted an extension or who is on contract and then deem them Commissioner. I certainly believe that’s legally flawed and believe that this ought to be challenged in court,” he told Kaieteur News. Further, the AFC leader said that it is not in the interest of the society to have the concerns expressed by the Opposition Leader disregarded particularly when that person has an integral role to play in the selection and appointment process. Attorney General (AG) and Legal Affairs Minister, Anil Nandlall, S.C. “This is not a question of politics.  This is a question of upholding the law in the land and it is a question of law and order, and, if you have such strong objections coming from the Leader of the Opposition, Mr. Norton, particularly his lack of confidence in that particular candidate, I believe it’s dangerous waters to persist with that candidate, because what happened is unfortunate for Mr. Hicken (but it) is going to be perceived as the political candidate of the government of the day,” Hughes stated. Retired Assistant Police Commission (ACP), Clinton Conway in a recent letter to the editor last week said to appoint Hicken as the Police Commission after he would have passed the age of retirement would be unconstitutional. Conway noted that the appointment of a Commissioner of Police and Deputy Commissioner of Police is enshrined in the Constitution of the Cooperative Republic of Guyana. Article 211 (1) of the Constitution states,” The Commissioner of Police and every Deputy Commissioner of Police shall be appointed by the President acting after meaningful consultation with the Leader of the Opposition and Chairperson of the Police Service Commission after the Chairperson has consulted with other members of the Commission.” Conway said it is pellucid that there is no need for any agreement with the parties for the appointment in question. “The vex question is whether or not the President can confirm Clifton Hicken who has passed the age of retirement as Commissioner of Police,” Conway reasoned. . Related Similar Articles