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ExxonMobil withholds $225 million in 2023 royalties from Guyana – Professor Hunter
Kaieteur News – ExxonMobil Guyana Limited (EMGL) reported in 2023 that total revenue from the Stabroek Block for that year was G$1,108,897,727,566, which means Guyana’s royalty should be G$22,177,954,551.32.
Dr. Kenrick Hunt, former ambassador and professor
However, in its 2023 annual report, ExxonMobil said the country received about 21,922,725,604 Canadian dollars in royalties. Royalties are a fixed percentage of the gross value of revenues paid to governments or natural resource owners. Professor and former ambassador Dr. Kenrick Hunter pointed out in a letter to this newspaper on Thursday that the country did not receive the full 2% royalty. Dr. Hunter explained: “The correct royalty of 2% should be 22,177,954,551.32 Canadian dollars; therefore, the difference that EMGL must pay is 255,228,947.32 Canadian dollars.”
He noted that the country received only 1.977% of the royalties, not 2%. Therefore, Dr. Hunt cautioned policymakers, “When dealing with large numbers, especially in the billions and trillions of dollar values, rounding percentage figures can result in significant shortfalls of millions of dollars. Please round to three decimal places to avoid this unfortunate misrepresentation and accept only after verification.”
Under the 2016 Production Sharing Agreement (PSA) signed between Guyana and ExxonMobil and its partners, Guyana will receive a 2% royalty on all oil produced and sold. Guyanese have been protesting the low royalty rate stipulated in the agreement, demanding that the Guyanese government negotiate more royalties. However, Dr. Hunt’s revelations show that the country is not receiving its fair share of royalties from oil companies.
Earlier, Professor Hunt had warned that the country was not receiving the full 2% of the royalty. But Vice President Bharrat Jagdeo explained this. Jagdeo assured: “We get 2% of the gross sales as a royalty. What might confuse Hunt is… the 2% is paid out of the contractor’s profit, so in this case, profit oil is 25% and 75% is for cost recovery, so out of the 25% of gross sales, we get 12.5%. The contractor gets 12.5% and then takes 2% from its share of profit and gives it to the government, so we end up getting 14.5% of the 25% gross profit and they end up getting 10.5%.”
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