…Min. Gaskin warns Corentyne chambers against PPP ‘ramblings’
…says Guyana will earn revenue from oil on day one of production

MINISTER of Business, Dominic Gaskin, says Guyana will earn revenue and royalties from oil from day one of production and he cautioned that citizens should not be fooled by the ramblings of the opposition.

He made the comment at the recently held dinner and awards ceremony of the Central Corentyne Chambers of Commerce (CCCC). He made the disclosure during his presentation on the oil and gas sector and noted that while there is the public outcry for disclosure on the terms of the agreement they are bound by confidentiality agreements in the initial contract that was signed by the previous administration.

“The initial exploration license was issued in 2008 by the then President of Guyana at the time and now leader of the Opposition, Bharrat Jagdeo. His government would have issued the original license with the original agreement in which the confidentially clause was inserted. Now for him to ask for a disclosure from the government shows that he wants us to breach the agreement he put in place when he could have made the deal public when he was in power.”

Gaskin did however disclose that apart from royalties and revenue from when production begins government will also earn revenue from withholding taxes due on payments for foreign contractors by Exxon Mobil. This revenue he noted is “likely to be significant and can be earned even as we speak” since they are payable to contractors who would need to do work before oil is produced.

He stated that the Petroleum Prospective License which announced the exclusive oil exploration in a particular block was issued for a period of four years with the condition to renew twice for a period of three years each for a total of ten years per block. In 2015 Exxon Mobil found deposits of commercial quantities in the Stabroek Block of approximately 800 million barrels of oil which after recent additional discoveries is now pegged at 2.7 billion barrels of oil and submitted an environmental impact assessment to the Environmental Protection Agency and has received the environmental permit to start production in 2020.

It is expected that Exxon Mobil will initially invest US$4.4 billion for the Liza one Project alone which includes converting an oil tanker into a Floating Production Storage and Off-loading Base (FPSO) which is the epi center of the offshore operations. The contract for this has already been awarded and it is being built in a dockyard in Singapore.

The FPSO will have the capacity to extract 100,000 barrels of oil per day. 17 wells are expected to be connected to the FPSO of which 8 are for production, 6 for water injection and 3 for gas injection. The water and gas injection wells are needed to stabilize the pressure of the production well to ensure a constant flow. According to Minister Gaskin, the government is looking at the possibility of making use of some of the assorted gas that is being re-injected into the wells without affecting production.

This is currently being entertained by the government which is looking at the various options and investment needed and the feasibility of each option before a decision can be made. Also on the charts were the possibility of an on shore facility however since an agreement was made with a local company and Exxon Mobil for use of their wharf facilities as a support base for the Liza one Project this option is now on the back burner but can be re-considered based on need for future production.

The minister of business also asked the business community not to be fooled by the ramblings of the opposition who is advising the population not to vote for the current administration again because they will steal the oil money. “Guyana has submitted in August its candidacy for extractive industries transparency initiative, a global standard to promote an open and accountable management of extractive resources, which is a demonstration that the government and Guyana is moving towards greater transparency in the way that it manages its natural resources and will ultimately benefit the Guyanese people as they will now be able to hold the government more accountable for their stewardship of the national platform”

“In addition to this Guyana now has a draft local content framework which is designed to address how opportunities arising out the oil industry will be treated in relation to Guyanese nationals and Guyanese businesses. The draft deals with developing capacity, Guyanese ownership of businesses, provision of goods and services by local suppliers, value-addition in the sector and societal benefits. It is expected that the local content policy will develop over time with Guyana’s long term national interest as its driver.”

Further the minister disclosed to the packed audience of businessmen and women that Exxon Mobil has launched a resource centre in partnership with a local service provider that is geared to provide assistance from small to medium sized businesses to improve their competiveness and increased capacity and will also provide information on technical standards and procurement opportunities within the sector. Guyanese business can now register their businesses online and this will allow big suppliers and contractors within the industry to find suitable local suppliers for their requirements.

Based on projection, oil prices are predicted to hit around $80 per barrel in 2020 as opposed to the current price of around $52 per barrel that is around $30 more per barrel. This equates to approximately GYD$74 billion annually in revenues that the government is expected to receive based on the current agreement of 50/50 split after cost recovery with Exxon mobile from the Liza one well alone, and is touted as being the key to transforming the country and delivering the good life for all.