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Guyana's Business Minister not clear on ExxonMobil's deals with Ghana and Guyana


By Kaieter News

Petroleumworld 03 07 2018

When it comes to the deals American oil giant, ExxonMobil signed with Guyana and that of the African state, Ghana, Business Minister Dominic Gaskin appears to be confused or worse, misleading.

This was apparent yesterday as he made his presentation at an oil and gas forum that was held at Duke Lodge, Kingston.

The Minister told his audience, consisting largely of members of the private sector, that he has no issue with anyone who endeavours to examine contracts signed by other countries. His only issue is when the analysis of that person fails to take into account, the “bigger picture”.

“Let's look at the whole picture and not just the parts where we are getting less than the other country,” the politician expressed.

At this point, the Minister sought to address some of the differences between the contract ExxonMobil signed with Guyana and that of Ghana.

In his cherry-picking exercise, the Business Minister noted that Guyana has a royalty and production sharing type of agreement. But Ghana, he said, has a royalty and taxation model. Whichever you choose to call it, oil and gas experts agree that both are Production Sharing Agreements.

The Minister went further to state that Guyana receives a two percent royalty and a 50 percent of profit oil while Ghana receives a 10 percent royalty and a 35% corporation tax on profit.

The Business Minister stated that prior to this agreement Ghana has with ExxonMobil, oil companies had been paying a five percent royalty. The Minister failed to mention however that in comparison, Guyana still did not secure a better deal for its nonrenewable resource.

Furthermore, the Minister stated that Ghana has a Petroleum Exploration and Production Legislation that gives Government a 10 – 15% stake in oil production companies subject to payment of their share of operating expenses. He noted that Guyana's Petroleum Act has no such provision.

But several local oil and gas commentators found this to be an appalling statement from the Minister. In fact, Guyana's legislation has provisions for that same kind of interest.

And even if there were no provisions in the law, Kaieteur News was able to confirm with several experts that Guyana could have negotiated for equity in the company operations from the outset.

Minister Gaskin also stated that ExxonMobil enjoys the same import tax waiver in Ghana as it does in Guyana. But this is far from the truth. Ghana's contract does not allow for exemptions on hundreds of items, but this is the case in Guyana.

The Minister noted that unlike Guyana, the African state of Ghana did not receive a signing bonus. What Gaskin failed to state is that this is one of the very reasons why the Ghana-ExxonMobil deal was sent to Parliament, so that Ghanaians can craft a better deal.

The politician goes further to state that the Ghanaian contract has stability provisions. But this too is false. There is not a single paragraph or sentence in the Ghana contract which says that ExxonMobil would be insulated from future laws and taxes to be imposed by that nation.

Furthermore, Gaskin was careful to note that in Ghana, the laws require at least five percent equity to be held by a local company. This is stated in that nation's Local Content legislation. The Minister's excuse for Guyana not having such provisions is the lack of similar legislation. But what Minister Gaskin fails to mention is the fact that Government has been pussyfooting on Local Content Policy, much less legislation, for more than a year.

After noting the aforementioned, several members at the oil and gas seminar yesterday were convinced that Gaskin is confused or deliberately misleading the public. Either way, commentators contest it is clear that Minister Gaskin did not read the Ghana deal or even Guyana's with ExxonMobil.


Story from Kaieter News
03 07 2018

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