Esso exploration gets tax break – as oil exploration activities continue

Georgetown, GINA, August 9, 2016

The National Assembly last evening approved the maintenance of tax breaks to Esso Exploration and Production Limited and partners as the company continues oil exploration in Guyana.

Minister of Finance, Winston Jordan moved the motion for the affirmation of the petroleum order during the final Sitting of Parliament before recess yesterday.

This order has its origins in the Petroleum Exploration Production Act which was promulgated in 1986.  This act governs petroleum exploration and production in the territory of Guyana.

Finance Minister Winston Jordan moving the petroleum order in Parliament

Finance Minister Winston Jordan moving the petroleum order in Parliament

Jordan told the House that Esso Exploration and its joint venture partners approached the government to seek an extension of the period of time within which to complete exploration operations under the current petroleum prospecting licence which ends in June 2018. This, Jordan noted led to the review of the 1999 agreement by the Ministry of Natural Resources “with a view of strengthening the terms and benefits for Guyana bearing in mind the new realities of the oil discovery.”

On June 29, 2016 the government and the joint venture partners signed a production share agreement. “The government agreed to permit the investors to maintain exploratory control and production rights over the Stabroek blocks without alterations or variations,” Jordan said.

The provisions of section 51 of the Petroleum Act allow for the waiver of the application of certain laws in favour of licensees with whom the government has entered into production share agreements.

“Section 51 of the Act prescribes Finance Minister by order formative resolution of the national assembly direct that any or all of the written laws mentioned in subsection 2 shall not apply to or in relation to a licensee,” Jordan explained.

Jordan added that the order provides investors with the necessary comfort and assurances that the agreement will be respected in its entirety.

Meanwhile, opposition Member of Parliament and Chairman of the Natural Resources Committee, Odinga Lumumba expressed disappointment in not being informed earlier about the motion. “It makes us feel funny, it makes us feel that there is a hidden agenda and it’s not a laughing matter it is a question of nationalism,” Lumumba said.

However, Minister Jordan assured that there was “no intent to sandbag or ambush the opposition”. It was pointed out that the Order was published in an Extra Ordinary copy of the Official Gazette on August 2.

Natural Resources Minister, Raphael Trotman supported the motion. “This order takes us to the direction of bringing us into alignment with what is the norm and what is required by law,” Trotman said.

Minster Trotman pointed out that his ministry is currently strengthening bilateral engagements with several first world countries to develop the oil and gas sector.

The Natural Resources Minister also noted that a ministerial committee was established comprising the Ministries of Finance, Public Infrastructure, Agriculture, Business, Communities, Social Protection, Education and Citizenship.

“Until December we will be working in conjunction with other ministries to strengthen this framework,” said Trotman.

 

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