Guyana’s first lift of crude for this month-Dr Bynoe
Director of the Department of Energy (DE), Dr. Mark Bynoe
Director of the Department of Energy (DE), Dr. Mark Bynoe

“I CAN say definitively that Guyana’s first million-barrel entitlement will be shipped in February,” Director of the Department of Energy (DE), Dr. Mark Bynoe announced on Thursday.

As a guest on Hits and Jams 94.1 BOOM FM programme, Hot Seat, the Energy Director said that Guyanese were closer to being able to look at a future, solely within their jurisdiction, as yearly increases in revenue will put the country on better economic footing. Guyana’s crude will be sold – more or less – at a million barrels per lift. By the time the country is producing at a peak of 120 barrels of oil per day, a new lift would be anticipated every 8 to 10 days.

Guyana’s crude will also be sold under a Free On Board (FOB) contractual agreement which will see the crude being sold to the buyer at the exit point of the Floating Production Storage and Offloading (FPSO) vessel, with the buyer taking responsibility for aspects such as insurance and shipping.

Meanwhile, Guyana’s share of exported crude will be sold on a Fee-Per-Barrel basis while the Guyana National Bureau of Standards (GNBS) is providing expertise for oversight with regards to measurement, calibration and testing functions. Back in July 2019, Dr. Bynoe had stated that the department was aware of the risk associated with not getting this right. In all its efforts, the department had stated that industry-standard documents, based on the Association of International Petroleum Negotiators Crude Lifting Agreement (CLA), was being applied.

The CLA is a document, used throughout the industry worldwide, to set up mechanisms for allocating the schedule of crude cargo liftings, based upon volume entitlements which consider the cost recovery rules of the Petroleum Agreement.

THE BIGGER PICTURE
The Director stated that the Energy Department was well aware of the contention of many Guyanese with the last contract signed with ExxonMobil but he explained that there’s more to understand from what Guyana stands to benefit than by simply looking at one aspect.
“We are very conscious of the fact that there are areas within the existing contract from which Government, for the people of Guyana, can be able to extract greater value and that’s been one of our primary foci,” Dr. Bynoe said.

However, to be able to do that, he stated that the DE will require qualified experts and increased capacity which was why it had begun to recruit experts so that their expertise could be transferred to Guyanese over time. The DE head stated that while his position was not to defend contracts signed by the government, those critical of the current contracts must understand that prior to the deals the confidence in Guyana’s basin was not where it stands today.

“It was expected that one of the things you have to do was to incentivize the system to encourage investors. Now that the investors have become successful it seems like we forget from whence we came,” he stated.

Dr. Bynoe explained that Guyana will be receiving at a minimum, 2 per cent royalty on all oil produced in the Block plus 12.5 per cent profit oil. ExxonMobil will also have to pay withholding taxes while Guyana continues to receive foreign direct investments and benefit from joint venture initiatives; employment and jobs for service suppliers.

“Last year November we had over 600 delegates coming to GIPEX. Many of those delegates passed through either the Eugene Correia Airport or the Cheddi Jagan International Airport. The people who transported them were simple taxi drivers; the bag handlers were the people who are there day-to-day; the places they went to eat had persons who were pretty much lower down – if you want to call it that— on the socio-economic ladder. So, in large measure those benefits are already trickling down.”

As ExxonMobil liquidates its costs, by 2025 50 per cent of all Guyana’s oil sold will come to Guyana rising up to 52 per cent return on every barrel of oil sold. Dr. Bynoe urged: “We have to look at the sum-total of the deal and not focus exclusively on one aspect.”

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