New Production Sharing Agreement terms will apply to future blocks, not the Stabroek Block as Government honors 2016 contract- says Present Irfaan Ali

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With the announcement of new fiscal terms for the auctioning of fourteen oil blocks offshore Guyana, some opposition party members have expressed views that these terms should also be applied to ExxonMobil’s Stabroek Block but President Irfaan Ali has made it pellucid that the Production Sharing Agreement signed by the APNU+AFC in 2016 will be respected. However, successful bidders of future blocks will be subjected to the new conditions.

Outlined in the existing Stabroek Block Production Sharing Agreement (PSA) with ExxonMobil, signed by the APNU+AFC administration in 2016 is 2% royalty rate, 50/50 profit sharing, and a waiver of taxes. While the coalition has made several requests for the Ali-led administration to renegotiate the contract citing its imperfections, Government has indicated that the PSA remains without a renegotiation in keeping with contract sanctity.

In light of new fiscal conditions implemented for the relinquishing of fourteen oil blocks offshore Guyana, the opposition strongly believes that these terms should be extended to ExxonMobil.

President Irfaan Ali was recently questioned whether there are any plans to introduce the new conditions to the oil giant. He responded by acknowledging that the 2016 contract is lopsided and that the previous administration did a poor job at negotiating a satisfactory deal. 

“We have to respect the agreement, that is how the international world works, you have to respect the contract. Everybody acknowledges that but we are committed to ensuring that other blocks would not have the same PSA,” the President said. 

According to the production sharing agreement, the life cycle of the 2016 contract is 20 years. The renegotiating period is anticipated to be around 2036.

Nonetheless, the new fiscal terms for the oil blocks expected to be auctioned soon will see Guyana benefiting from 10% royalty, 50/50 profit sharing, 65% cost ceiling and 10% Corporation tax.

The fourteen blocks would range from about 1000 square kilometers to about 3000 square kilometers each with majority of them being closer to 2000 square kilometers, according to Vice President, Dr. Bharrat Jagdeo.

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