APNU parliamentarian Sharma Solomon has called on President Irfaan Ali to release the production, revenue and cost-recovery figures underpinning his announcement that Guyana is now entitled to approximately 39.8% of crude production from the Stabroek Block.
In a statement yesterday, Solomon, the party’s representative on natural resources, said Ali’s announcement on Tuesday that the ExxonMobil-led consortium had recovered approximately US$55 billion in project costs was of significant national importance but could not end with the disclosure of a percentage.
“Guyanese are entitled to know what that percentage means in actual production, revenue, and money received by Guyana,” he said.
At a press conference on Tuesday, Ali said Guyana’s share of profit oil had risen from 12.5% to approximately 39.8% because the amount of crude being applied to cost recovery had fallen sharply.
According to the President, the contractors recovered approximately US$55 billion in expenditure two years earlier than projected. He said that while up to 75 barrels out of every 100 produced had previously been assigned to cost recovery, only about 20 barrels are now being applied to costs.
The remaining approximately 80 barrels are classified as profit oil and are divided equally between Guyana and the Stabroek Block contractors, giving the country about 39.8 barrels out of every 100 produced. Guyana also receives a 2% royalty.
Ali stressed that the provisions of the controversial 2016 petroleum agreement had not been amended and that the increased share resulted from a reduction in recoverable costs rather than a renegotiation of the contract.
However, Solomon said the limited information presented at the press conference did not adequately answer the central questions arising from the announcement.
“What has been produced and sold? What costs have been declared for recovery? What costs has Guyana accepted or rejected? What remains under dispute? And how did your government accounting arrive at 39.8%?” he questioned.
He called on the government to state what information would be released, the form in which it would be presented and how soon it would be made available.
Solomon had previously warned that the government should not accept ExxonMobil’s declaration that US$55 billion in costs had been recovered without independent verification. He had also called for disclosure of the costs remaining in the recovery pool.
He said then that the often-touted 50/50 profit-sharing arrangement did not mean Guyana received half of total oil production or gross petroleum revenue. The equal division applies only to the profit oil remaining after allowable costs have been deducted.
When the contractors used the maximum 75% of production for cost recovery, only 25% remained as profit oil. Guyana’s half amounted to 12.5% of total production, in addition to the 2% royalty. With cost recovery now reportedly reduced to around 20%, Guyana’s profit-oil entitlement has increased substantially.
The absence of ring-fencing under the petroleum agreement, however, allows expenditure from new projects and exploration activities across the Stabroek Block to be recovered from revenue generated by producing developments. The cost-oil allocation could therefore increase again as the consortium invests in the Uaru, Whiptail and other developments.
Ali acknowledged on Tuesday that the cost bank had not disappeared and said operating expenses and expenditure on additional developments would continue to be charged to the block.
Solomon yesterday pointed to the government’s previous audits of ExxonMobil’s expenditure as grounds for demanding full disclosure.
He said the audit covering expenditure between 1999 and 2017 identified approximately US$214.4 million in disputed expenses. The audit of approximately US$7.2 billion in expenditure declared between 2018 and 2020 identified US$65.1 million which was not accepted by the government, while a third audit covering some US$19.6 billion in costs incurred between 2021 and 2023 has been under review.
“Against this background, Guyanese cannot simply be asked to accept ExxonMobil’s declaration of what has been spent and recovered,” Solomon said. “ExxonMobil has a commercial interest in its accounts. Your government has a national duty to verify them.”
He said the call for disclosure was neither anti-investment nor anti-ExxonMobil, but was intended to protect Guyana’s interests. The production-sharing agreement, he added, gives the government the authority to audit and verify the consortium’s costs.
“Show the audits. Show the disputed costs. Show what has been accepted and rejected. Show the calculation that produces 39.8%. Show the production, sales, cost-recovery, and revenue figures,” Solomon urged.
“Most importantly, tell the nation what Guyana will actually receive.”
He argued that while oil had transformed the scale of Guyana’s economy, it should not lower the standard of accountability.
“The people are entitled to the figures, the documents, and the accounting,” Solomon said. “The oil belongs to Guyana. Guyanese have a right to know exactly what is theirs.”
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