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Guyana lost US$1.8B in 50% windfall tax from ExxonM in 2023 Jul 04, 2024 News Guyanese, local and abroad, have been protesting for the Government of Guyana to engage the oil companies in seeking a fair oil deal. Kaieteur News – Guyana could have gained US$1.8B in windfall taxes from the massive profits recorded by ExxonMobil and its partners in the Stabroek Block last year.  The excess income generated as a result of higher oil prices is referred to as windfall revenue. Oil producing countries around the world have applied taxes to the huge windfall profits being earned by petroleum companies but policy makers in Guyana are adamant against the introduction of such fiscal regulations here. EMGL currently has three Floating, Production, Storage and Offloading (FPSO) vessels in operation. These vessels are producing more than 640,000 barrels of oil per day. The company in its 2023 Annual Report highlighted that a total of 142 million barrels of oil were produced and sold last year; Guyana received 17 million profit oil barrels. The price of Brent crude oil averaged US$83 per barrel in 2023. According to project documents seen by this newspaper however, Exxon anticipated an average oil price of US$53 per barrel. At this rate, Exxon would have made US$6.6B on the remaining 125 million barrels produced in 2023. Instead, at US$83 per barrel, some US$10.4B in revenue was generated. The higher oil prices therefore allowed Exxon and Co-Venturers to benefit from a hefty US$3.8B in windfall revenue. Had Guyana followed in the footsteps of other large producing oil states and heed the advice of international experts to apply a 50% windfall tax on these massive gains, the country could have raked in an additional US$1.9B in revenue. Notably, the windfall taxes this country lost amounts to more than the actual revenue deposited into the Natural Resource Fund (NRF) in 2023. It was reported that US$1.6B in profit and royalties was paid to the Fund, last year. Guyana has often been praised by the American oil giant for its high quality crude oil. In fact, only last month, Kaieteur News reported that the cost to produce a barrel of oil in Guyana is among the lowest in the industry. The International Energy Forum (IEF) and S&P Commodity Insights in a June 2024 report titled, “Upstream Oil and Gas Investment Outlook” sheds light on the changing dynamics of global oil production costs, with particular emphasis on Guyana’s position as a cost-effective producer in the industry. The report reveals that the Middle East boasts the lowest average breakeven price at approximately US$30 per barrel Brent, followed closely by Guyana with a breakeven price of US$36 per barrel Brent. In contrast, the average new well in the United States requires around US$57 per barrel Brent. The term “breakeven” simply refers to the average cost required to pay back investors and earn a return. Windfall taxes Oil companies operating in the United Kingdom (UK) will continue to face 75% taxes on the massive windfall of revenue they are poised to receive. It was recently revealed that the Chancellor has extended the Energy Profits Levy (EPL), the windfall tax on UK oil and gas profits, by a year to 31 March 2029. Other states like Germany in 2022 introduced a 33% windfall tax on the record shattering profits of oil and gas companies. The Indian Government in 2022 also announced that it would further be taxing the profits of petroleum companies in a decision to move up the windfall tax on crude oil from 9,500 rupees (US$116.49) per ton, to 10,200 Indian rupees (US$125.22) per ton. The energy profits levy have been introduced in several other countries like the United States of America (USA), Australia, Canada and Mongolia. Previously, Vice President Bharrat Jagdeo told reporters that could not be replicated in Guyana since, “we are bound by a PSA (Production Sharing Agreement) with very specific terms on the taxation side.”To this end, he suggested “if you change the taxation here, it’s considered a breach of the contract.”Seeking to draw a distinction between Guyana and the ABC countries, Jagdeo suggested that those companies would have been operating for decades in those jurisdictions and as such would have come under the standard tax regime for the respective countries within which they operate.According to the Vice President, in such a situation, the parliaments of those countries could by way of legislation easily make the changes to institute for example a windfall tax.He was adamant, this is the key reason the same cannot be done in Guyana, if the administration did in fact go ahead and make the legislative changes it would be considered a breach of the contract, “we would run afoul of the agreement.” It must be noted that both Exxon and the government have diverted from the terms of the PSA on provisions such as audit and the need to conduct a feasibility study for the utilization of the gas resources, yet the administration continues to make excuses to engage the company for the country to benefit more from its resources. 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Life and death in Gaza’s ‘safe zone’ where food is scarce and Israel strikes without warning Jul 04, 2024 News Life and death in Gaza’s ‘safe zone’ where food is scarce and Israel strikes without warning KHAN YOUNIS, Gaza Strip (AP) — An Israeli airstrike slammed into a residential building next to the main medical center in Gaza’s southern city of Khan Younis, wounding at least seven people, hospital authorities and witnesses said Wednesday. Nasser Hospital sits in the western part of the city, which is inside the Israeli-designated humanitarian “safe zone” where Palestinians have been told to go, according to maps provided by Israel’s military. The latest Israeli evacuation order affected about 250,000 people earlier this week across wide swathes of Gaza, the United Nations estimated. As dust from Wednesday’s strike billowed through a street near Nasser Hospital, an Associated Press contributor filmed people running in all directions — some rushing toward the destruction and some away. Men carried two young boys, apparently wounded. Later, civil defense first responders and bystanders picked their way across chunks of cement and twisted metal, searching for people who might have been buried. Is placed families ordered out of eastern Khan Younis on Monday have struggled to find places to live in overcrowded shelters and open areas in the western parts of the city. Wednesday’s airstrike hit an area that also includes a school-turned-shelter for displaced people, many of whom are living in makeshift tents. “We were sitting in this tent, three people, and we were surprised by the rubble and dust,” said one man, Jalal Lafi, who was displaced from the city of Rafah in the south. “The house was bombed without any warning, hit by two missiles in a row, one after another,” he said, looking back over his shoulder at the rubble, his hair and clothes covered in grey soot. The Israeli military did not immediately comment on the strike. Andrea De Domenico, the head of the U.N. humanitarian office for the Palestinian territories, said Gaza is “the only place in the world where people cannot find a safe refuge, and can’t leave the front line.” Even in so-called safe areas there are bombings, he told reporters Wednesday in Jerusalem. An Israeli airstrike Tuesday killed a prominent Palestinian doctor and eight members of his extended family, just hours after they complied with military orders to evacuate their home and moved to the Israeli-designated safe zone. Most Palestinians seeking safety are either heading to a coastal area called Muwasi or the nearby city of Deir al-Balah, De Domenico said. The Israeli military said Tuesday it estimates at least 1.8 million Palestinians are now in the humanitarian zone it declared, covering a stretch of about 14 kilometers (8.6 miles) along the Mediterranean. Much of that area is now blanketed with tent camps that lack sanitation and medical facilities with limited access to aid, U.N. and humanitarian groups say. Families live amid mountains of trash and streams of water contaminated by sewage. It’s been “a major challenge” to even bring food to those areas, De Domenico said. Although the U.N. is now able to meet basic needs in northern Gaza, he said it’s very difficult getting aid into the south. Israel says it allows aid to enter via the Kerem Shalom crossing with southern Gaza, and blames the U.N. for not doing enough to move the aid. The U.N. says fighting, Israeli military restrictions and general chaos — including criminal gangs taking aid off trucks in Gaza — make it nearly impossible for aid workers to pick up truckloads of goods that Israel has let in. The amount of food and other supplies getting into Gaza has plunged since Israel’s offensive into Rafah began two months ago, causing widespread hunger and sparking fears of famine. “It’s an unendurable life,” said Anwar Salman, a displaced Palestinian. “If they want to kill us, let them do it. Let them drop a nuclear bomb and finish us. We are fed up. We are tired. We are dying every day.” Related Similar Articles

4th oil project to begin pumping soon Jul 04, 2024 News The fourth FPSO, ‘One Guyana’ is being constructed by Dutch shipbuilder, SBM Offshore …as ExxonM expected to conclude installation activities in September Kaieteur News – Guyana’s fourth oil project, Yellowtail could see first oil ahead of its initial 2025 startup. ExxonMobil Guyana Limited (EMGL) the operator of the oil-rich Stabroek Block is currently engaged in installation activities offshore to support the deep-water project. The activity is expected to conclude on September 30, 2024, the Maritime Administration Department (MARAD) informed in an advertisement published in this newspaper on Wednesday. According to the Notice, Exxon is utilizing the OSV Normand Installer vessel, in the area situated approximately 107.4 nautical miles (198.9 kilometers) off the Coast of Guyana and covers an area of 25.4 square nautical miles (87.4 square kilometers). Chief Operating Officer (COO) for Hess Corporation, Greg Hill had informed shareholders that the project was running way ahead of schedule. Yellowtail would be the largest oil project to come on stream since the country commenced production activities in 2019. The Yellowtail project will be operated by the ‘One Guyana’ Floating, Production, Storage and Offloading (FPSO) vessel, designed by Dutch shipbuilder, SBM Offshore, to produce 250,000 barrels of oil per day (bpd). Kaieteur News previously reported that the project will develop approximately 925 million barrels offshore by drilling approximately 45 to 67 development wells (including production, water injection, and gas re-injection wells). Production will continue for 20 years. The US$10B project received government’s blessings on April 1, 2023. By 2027, Exxon will be producing 1.3 million bpd. Three FPSOs, the Liza Destiny, Liza Unity and Prosperity are producing approximately 640,000 bpd. This means that the fourth project will increase daily capacity to almost 900,000 bpd. Two other projects, Uaru and Whiptail, the fifth and sixth projects respectively have also been sanctioned by the government. These developments are being designed to each produce 250,000 bpd and are likely to come on stream by 2026 and 2027 respectively. Although Guyana’s increased oil production has enlisted the country as the world’s fastest growing economy, citizens have been complaining that the wealth generated from the sector has not been trickling down to improve their lives. The lopsided 2016 Production Sharing Agreement (PSA) Guyana signed with ExxonMobil, Hess and CNOOC has been criticized as the deal does not ensure Guyanese benefit from a fair share of their resources. According to the contract, Exxon can deduct up to 75% of the monthly revenues earned to repay their investments in the Stabroek Block. The remaining 25% is then shared with Guyana as profits. The country also receives a meager 2% royalty. Related Similar Articles

AG still to write US for information on sanctions Jul 04, 2024 News Attorney General (AG) and Minister of Legal Affairs, Anil Nandlall, SC Kaieteur News – Attorney General (AG) and Minister of Legal Affairs, Anil Nandlall, SC on Tuesday evening disclosed that he is still to write the United States Department of the Treasury for information on the sanctions imposed on two Guyanese businessmen as well as a government official. The US Treasury’s Office of Foreign Assets Control (OFAC) imposed sanctions on Guyanese billionaire Nazar Mohamed, his son Azruddin Mohamed for a series of corruption – including gold smuggling and the Permanent Secretary (PS) for the Ministry of Labour, Mae Thomas for allegedly misusing her position to offer benefits, like government contracts to the Mohameds. Last Friday, in a statement issued by Dr. Ashni K. Singh, Senior Minister in the Office of the President with Responsibility for Finance and the Public Service, announced that the US has informed them that the request for information must be sent by Guyana’s Attorney General to the U.S. Department of Justice, which will then work with OFAC to gather source documentation on the matter. “Our Government will now submit the request following the process advised. We will also continue to pursue, through the appropriate channel, the relevant information covered by the Tax Information Exchange Agreement. This Agreement provides for the exchange of information to administer and enforce laws concerning the taxes specified therein, to assure the accurate assessment and collection of taxes to prevent fiscal fraud and evasion, and to develop improved information sources for tax matters,” Dr Singh said. However, on Tuesday night AG Nandlall disclosed, “The question is whether I have commenced that course of communication. I have not done so as yet and I expect to do so before the end of this week.” Following the sanctions handed down by OFAC, Dr. Singh and Commissioner General of the Guyana Revenue Authority (GRA), Godfrey Statia wrote to the U.S. authorities seeking more information about the sanctions. Dr. Singh wrote to the U.S. Department of the Treasury while the Commissioner General under the ambit of the Tax Information Exchange Agreement between Guyana and the US, has been in contact with the American authorities. Moreover, United States Ambassador to Guyana, Nicole Theriot on June 14, 2024 on the sideline of an event at the U.S. Embassy in Georgetown, said the sanctions, are the result of over two and a half years of investigations by U.S. authorities. Ambassador Theriot highlighted the gravity of the offenses that led to these sanctions. She stated, “We reserve these types of sanctions for gross levels of corruption and human rights abuses.” Theriot went on to explain that, “it’s a very high bar, we do not do this lightly. This is something that we ensure that we have a preponderance of evidence before we’re ready to levy the sanctions and we had that in this case against the three individuals who were sanctioned.” In response to queries about sharing evidence with local authorities, Theriot explained that she had immediately passed the request to the Treasury Department. “I strongly recommended that they share as much of that evidence that is unclassified or that they can share because we have a wonderful partnership with the government of Guyana,” she added. Theriot underscored that she strongly recommended to her partners in Washington that they provide the Guyanese government with as much information as possible to aid local investigation. She said too, “We want them (local authorities) to be able to take that information and do with it what they need to do.” On the timeline for presenting this evidence, Theriot expressed a desire for urgency. “I wish I could, I wish it was today. That would be wonderful. But unfortunately, I don’t control the entire US government. So I did ask them though, to expedite it,” she said. Notwithstanding, Minister Singh said that in addition to the mutual legal assistance process, the government of Guyana expects that the arrangements in place for exchange of tax information and cooperation between tax authorities will provide a means through which relevant information can be shared on matters of this nature in a timely and effective manner. “We will continue to work closely with all our US counterparts in order to advance this matter in the most thorough and expeditious manner possible,” Dr. Singh said noting that the government will keep the nation informed in the interest of the highest level of transparency. Related Similar Articles