Guyana’s first lift of crude set for February
DPI, Guyana, Friday, January 31, 2020
Shell Western Supply and Trading Limited will lift Guyana’s first share of oil from the Liza Phase One Development in the next few days.
This was disclosed by the Director of the Department of Energy, Dr. Mark Bynoe during an interview on the radio programme the Hot Seat. “I am sitting here and I can definitively say that Guyana’s first million-barrel entitlement will be shipped in February,” he stated.
The Energy Head was at the time responding to questions surrounding the deal Guyana has with ExxonMobil and its co-venturers Hess and CNOOC. Dr. Bynoe used the opportunity to shed some light on Guyana’s Public Sharing Agreement (PSA).
“Within the petroleum industry, we have what we call a royalty and tax regime or you can have net production-sharing arrangements plus royalties which is what Guyana has or you can have Gross Production Sharing agreements and royalties,” he explained.
Guyana’s PSA states that the country receives two percent royalty in addition to 50 percent of profit oil. This means, after 75 percent of the investment cost has been recovered, Guyana will receive 12.5 percent of the remaining 25 percent with ExxonMobil, Hess and CNOOC receiving the other 12.5 percent. But before profits are divided, Guyana’s two percent royalty is calculated on the overall 25 percent of the profit oil. The royalties are paid to the country by ExxonMobil and its coventurers, making Guyana’s share of the crude 14.5 percent or 52 percent of profit oil.
“The beauty about what Guyana has is that from day one, you start receiving benefits. If you were to go with the Tax Royalty Regime, which is what Suriname has, that is what they have been comparing and neglecting in its totality, the discussion around profit oil,” the Energy Director stated.
Guyana commenced oil production on December 20, 2019, and the first lift of crude was carried out by ExxonMobil in early January.