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GUYANA | Gov't benefits financially from oil sector

Featured Finance Minister Winston Jordan Finance Minister Winston Jordan
GEORGETOWN, Guyana, Oct 11, CMC – The Guyana government says it has collected approximately GUY$900 million in taxes from “activities connected to oil and gas” for the first half of 2017.

Finance Minister Winston Jordan said the figure “might have been the resolution of one or two issues that were pending with some of the companies”.

Oil gasOil and gas companies here have to pay withholding taxes levied on income (interest and dividends) from securities owned by a non- resident.

These taxes are in addition to the revenues that Guyana is expected to begin collecting when oil production commences in 2020. The government has a production sharing agreement between the US-oil giant, Exxon, and its partners and itself.

Guyana will receive a royalty of two percent on gross earnings and benefit from 50 per cent of the profits from the sale of petroleum once production commences in 2020.

Jordan said that the Sovereign Wealth Fund (SWF) will be available for public consultation early next year. He noted that the Ministry of Finance is currently reviewing comments from partners before it is submitted to the consultant, who helped in the initial drafting of the legislation for the establishment of the SWF.

Guyana’s fifth oil discovery was announced last Thursday but knowing the actual resource size of the recent discovery will not be certain until 2018.

Exxon’s Public and Government Affairs Director Kimberly Brasington said quantifying the barrel equivalent of Guyana’s most recent oil find at the Turbot-1 well by ExxonMobil will require further analysis of the data that was collected.

Drilling of Turbot-1, which is located in the Stabroek Block, began in August by ExxonMobil affiliate Esso Exploration and Production Guyana Limited. A reservoir of 75 feet (23 meters) of high-quality, oil-bearing sandstone was encountered.

“What our announcement indicated is that while drilling we encountered hydrocarbon. And so, because everybody is watching so closely now we didn’t want to wait,” Brasington noted. By the end of September, Turbot-1 was drilled to 18,445 feet (5,622 meters) in 5,912 feet (1,802 meters) of water. In fact, drilling of Turbot-1 is ongoing.”

However, Brasington cautioned that data generated from Turbot-1 is not sufficient “to say with certainty the volume”, that is, oil equivalent barrels of this new field.

“They’re already looking at the data but they are going to finish up at Turbot and continue to assess all the data they gathered from drilling this well. And then we will come back in 2018 to drill a second well that will help us to calibrate and be in a better position to announce what we think is the estimated resource size,” Brasington explained.

The company’s decision was similar during the exploration or the Liza and Payara fields. Announcements on the barrel equivalent of the hydrocarbon in those fields were made after the subsequent drilling of Liza-2 and 3 and Payara 2.

The Liza and Payara fields together with the Liza Deep and Snoek wells places the Stabroek Block gross resources between 2.25B to 75B oil equivalent barrels.

As Exxon and its partners, Hess Corporation and CNOOC Nexen, continue exploration in the Stabroek Block, Brasington said “there is more unknown, uncertainty” in the geology on the ocean floor as exploration moves away from the Liza field.

Turbo -1 is located 30 miles east of the Liza Phase One project. Even the newest drill field, Ranger is located further from the Liza, Payara groupings.

“Ranger is exciting. It’s another unknown…the geology under the ground it looks different. We’re optimistic and excited and our partners and everybody wants to continue exploring,” Brasington said.