…Exxon Senior VP tells Guyanese in Toronto
SENIOR Vice President of ExxonMobil in charge of exploration and new ventures, Michael Cousins, told a gathering in Toronto on Sunday that the sanctity of contract should be respected and that the investment being made by his company to recover oil here will see major transformation in Guyana with some 1357 Guyanese already benefitting from jobs.
The top official was at the time responding to a question posed from the audience during a town hall meeting on Guyana’s Oil and Gas Development hosted by the Canadian Council for the Americas at the Leparc Banquet Hall in Thornhill, Ontario.
Over 450 Guyanese turned up to hear from the Exxon officials which included Vice President Cousins, Guyanese Born Geoscientist Ashlika Persaud and Craig Kelly, Senior Director, Americas, with responsibility for International Government Relations.
The event got underway with Counsel General Anyin Choo lauding the initiative, opining that it was a welcomed one since it is preferable to hear directly from Exxon given that much of the information coming out of the media is sometimes controversial. Among the invitees at the Canadian Council of the Americas event were diplomats, former president of the Guyana Association of Municipalities and Mayor of Linden Carwyn Holland, officials of Exxon, representatives of various Guyanese organisations including the University of Guyana and Queens College Alumni and Guyanese living in Canada.
During his presentation, Cousins thanked the over 70,000 Guyanese living in Canada and said they show a great sense of responsibility in regards to development of the oil industry in Guyana. He added that during his 38 years in the industry he has never worked on a project quite like Guyana’s and saw the addition of Liza Destiny to the operations as a significant achievement.
Getting to this point in the process was however not without major sacrifices as over 326 wells were drilled overall without any success which cost Exxon and investors over USD 140 Million. Striking oil in 2015 however brought calmness to anxieties as history would have shown one of Exxon’s major competitors losing millions of dollars in its attempt to discover Guyana’s oil.
He further added that the 2015 Liza discovery shows that in four years Guyana found over six billion barrels of oil compared to Trinidad and Tobago which found 2.3 billion barrels over the course of its exploration. This significant investment he opined will see major transformation in Guyana with 1357 Guyanese already employed- of which 35% are women, and expenditure with local suppliers doubling annually as Exxon supports the building of a strong local content.
Cousins told the packed Banquet Hall that recovering the cost of exploration development will take four to five years, after which Guyana will enjoy 60% of the profits as Exxon believes in maximizing recovery benefits for the people of Guyana. He agreed that the 2% royalty is very topical at the moment but encouraged persons to examine the many other areas of benefits to Guyana.
The recently released Ministry of Finance’s 2019 Mid-Year Report records that for the first half of the year, withholding tax grew by $3.9B, or 65.9 per cent, largely reflecting payments from companies within the oil and gas sector. Personal income tax collections grew by $2B, or 16.4 per cent, when compared with the same period in 2018. Companies operating in the oil and gas sector accounted for $1.2B, or 61 per cent, of the collections. At the same time, the increased economic activity meant VAT from domestic goods rose by $2B, primarily due to higher payments from the manufacturing, distribution, services and oil and gas sectors.
The report also noted an expansion in foreign direct investment (FDI), of 60.5 per cent to US$826.4M. The significant increase in FDI was largely supported by oil and gas activities, which accounted for US$354.6M of the amount. Imported capital goods increased substantially, from US$155.2M to US$423M, primarily attributed to a substantial expansion in mining machinery, again, supported by oil and gas activity.
Activities directly related to the oil and gas sector also contributed to growth in many sectors including finance and insurance activities, transportation and storage, and other service activities. There are also numerous spillover effects on other sectors such as construction, where there has been an increase in construction of commercial and residential properties to service the oil and gas sector. The rebasing of the GDP, which is currently underway and expected to be completed before the end of the year, will better allow for a quantification of the impact of oil and gas activities on economic growth.
Guyana is on the verge of becoming the world’s newest petro-state and potentially the richest, Bloomberg said in an article last Tuesday. “In 2015, Exxon Mobil Corp. made what one of its executives described as a ‘fairytale’ discovery in the vast Stabroek exploration block off the Guyana coast. Since then, it’s found so much oil that by the mid-2020s Guyana, with a population of about 778,000, will probably produce more crude per citizen than any other country,” Kevin Crowley wrote in his article ‘The World’s Newest Petrostate Isn’t Ready for a Tsunami of Cash.’
Alluding to the Organisation of the Petroleum Exporting Countries (OPEC), Bloomberg noted that Guyana’s reserves would make it OPEC’s 12th-largest member after Angola. At the time of the compilation of the report, US oil giant ExxonMobil had projected that there were 5.5 billion barrels of oil equivalent resource in the Stabroek Block based on the finds to date, however, that figure that has been upgraded to six billion barrels. Based on 2018 statistics, Venezuela has the largest barrels of oil reserves with 302.8 billion followed by Saudi Arabia with 267 billion barrels and Iran with 155.6 billion barrels.
Guyana’s economy, with a Gross Domestic Product (GDP) of $3.63B, a growth rate of 4.1 per cent in 2018 and 4.6 per cent in 2019, is expected to further grow by 33.5 per cent and 22.9 per cent in 2020 and 2021 respectively. This is according to the NASDAQ Stock Market, which is an American stock exchange. It is the second-largest stock exchange in the world by market capitalisation, behind only the New York Stock Exchange located in the same city. NASDAQ said, with a per-capita income of $5,194, Guyana is a middle-income country and is covered by dense forest. It is home to fertile agricultural lands and abundant natural resources. Gold, bauxite, sugar, rice, timber and shrimp are among its leading exports.