–Exxon Director Kimberly Brasington

EXXONMOBIL’S Senior Public Relations Director Kimberly Brasington has dispelled claims that Guyana stands to collect no additional fee for its oil should the price of the product increase on the world market.

Brasington told the Guyana Chronicle Tuesday that Guyana will receive its fair share of profits based on the agreement, which allows the country to gain 50 per cent of the proceeds of oil sales.

“So for example, today it [oil] is selling at $72 or somewhere around that, the profit will be split 50/50. Or let’s say, the price may fall to $30 a barrel… like it did about a year or two ago, then we can only split $30,” Brasington explained.
She said the profit to Guyana from Exxon’s sale of the oil is “completely contingent on price”.

Brasington was at the time responding to an article in one of the local dailies that alleged under the Exxon agreement, Guyana is unable to tax “higher than expected profits” should oil prices increase.
The publication declared that Guyana would receive “not a cent” more given a ‘stabilisation clause’ in the Production Sharing Agreement (PSA) the government signed with the U.S.-based oil company.

Chartered Accountant Christopher Ram noted that while the nation is prevented from fully benefitting from higher than expected revenues, ExxonMobil gets to profit from favourable changing conditions in the oil market.

The Chartered Accountant and anti-corruption advocate contended that the issuance of a windfall or normal profit tax revolves around the fiscal regime of the country and the level of the government’s take, but to tax higher oil prices is prevented by the stabilisation clause.

Brasington told the Guyana Chronicle that with regard to taxes on the increased price of the commodity, Guyana does not have that type of agreement with Exxon.
She explained that there are basically two types of agreements, a profit-sharing agreement and one that speaks to royalties and taxes. In countries where revenues related to royalties and taxes, the agreement would stipulate what those taxes and royalties are.

She said all monies being paid to that country will come in the form of taxes and royalties. However, in Guyana where there is the profit-sharing agreement, the country receives it’s 50 per cent cut of the profit based on what price the commodity is being sold on the international market.

Brasington further explained that while it has occurred in other countries, it is not typical for royalties to be paid out when a profit sharing agreement exists.
Technically, she stated, what is received in Guyana’s case is more than a 50 per cent share in profit since the country also enjoys an additional two per cent royalty.

This, in effect, tilts in favour of the government, the Exxon representative opined. It was reiterated that Guyana’s profit-sharing agreement with Exxon, “is designed to provide the vast majority of value to Guyana through the government’s 50 per cent share of the profit oil”.

“Profit oil is based on the price of oil the day it is sold. If the price of oil increases, the revenue increases. If the price of oil decreases, the revenue decreases,” Brassington said.
ExxonMobil is adamant that if oil prices rise, Guyana’s revenue will increase through the share of profit from sales of oil and royalty.