{"id":2310,"date":"2023-03-08T12:27:00","date_gmt":"2023-03-08T16:27:00","guid":{"rendered":"http:\/\/www.chrisram.net\/?p=2310"},"modified":"2025-06-09T12:57:21","modified_gmt":"2025-06-09T16:57:21","slug":"every-man-woman-and-child-must-become-oil-minded-part-97-june-17-2022","status":"publish","type":"post","link":"https:\/\/www.chrisram.net\/?p=2310","title":{"rendered":"Every Man, Woman and Child Must Become Oil-Minded (Part 97) \u2013 June 17, 2022"},"content":{"rendered":"\n

Exxon and partners made more money than God \u2026. er Guyana<\/strong><\/p>\n\n\n\n

It is more than five months since the 96th<\/sup>. column was published on January 22nd<\/sup>. of this year. That column summarised the court action brought by citizen Glenn Lall seeking declarations against the tax provisions contained in the 2016 Petroleum Agreement. The respondent named in the action was the Attorney General. But Exxon, which is the largest investor and the Operator (Co-ordinator) in the Stabroek Block could not leave the matter to be settled between a Guyanese and his Government. It sought the Court\u2019s permission to be joined in the action with the unpleasant consequence that the case is now Esso and the Government of Guyana vs. a citizen of Guyana.  <\/p>\n\n\n\n

In seeking to convince the Court of its right to be joined in the action, Esso declared that the Petroleum Agreement was \u201csolemnly negotiated with the Guyana Government\u201d and that certain fiscal arrangements made the various Projects \u201cfinancially feasible and commercially viable.\u201d Solemn for Esso includes bullying GGMC Head Newell Dennison on a trip to the Exxon Campus in Texas which has been repeatedly commented on in my writings on oil and gas, and the arm-twisting of then Natural Resources Trotman\u2019s Ministry into the signing of the 2016 Agreement, so well documented in the Clyde & Company report on the circumstances surrounding the signing of the Agreement.  <\/p>\n\n\n\n

It is unfortunate that senior members of the current Administration seem unmindful of the experience of Dennison or the damning indictment of the APNU+AFC in the Clyde & Co. report, regardless of the fact that it involved a major heist of the country\u2019s natural resources by Exxon and its partners.<\/p>\n\n\n\n

The citizenry had long lamented the damage which Trotman and the Granger Administration had caused Guyana, through one of the most lopsided petroleum agreements of the modern age.<\/p>\n\n\n\n

The extent of that damage has manifested itself in the audited results of the performance of the three members of the Consortium \u2013 Esso, Hess and CNOOC \u2013 in 2021. They not only show exactly what Esso means by \u201cfinancially feasible and commercially viable\u201d but also that there is neither shame nor limit to the greed of Esso and its partners. To put it in a nutshell, or rather a simplified Table, Esso and its partners made more money in 2021 from the Stabroek Block than all the money raised by the whole of the Government in 2021, including its takings from oil. Not by a few millions but by billions. The following two Tables put it more starkly than any column can.<\/p>\n\n\n\n

Oil Companies income<\/p>\n\n\n\n

Table of Income Statements<\/p>\n\n\n\n

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A brief comment on the item Tax Credit in the Table above. Article 15.4 of the Petroleum Agreement requires that the tax liability computed under the Income Tax Act and the Corporation Tax Act to be paid to the GRA on behalf of the oil company and that \u201csuch sum will be considered income of the oil company. The income statements of Hess and CNOOC state that they are subject to Corporation Tax without disclosing that the payment is to be made by the Government of Guyana and that the amount of the tax paid by the Government is considered income of the company! Esso\u2019s financials are simply silent on taxation altogether.<\/p>\n\n\n\n

Current year profits would attract tax credits of $78,638 Mn. so that the total earned by the oil companies would be $391,191 Mn, or the equivalent of $1,862 Mn US Dollars, reduced by any set-off of losses. There is however, another unknown element: the tax laws require branches of overseas companies to pay income tax withholding tax of 20% of the after-tax income, other than in the reinvestment in fixed assets or short-term securities. I think that that would more than compensate for any adjustments to the tax credit for prior years unrecovered costs or accumulated losses.  <\/p>\n\n\n\n

It would be interesting but unduly optimistic to learn from the Government the exact amount included in the Certificate of Taxes paid issued to the three oil companies under section 15.4 of the Petroleum Agreement.<\/p>\n\n\n\n

Government Revenue<\/p>\n\n\n\n

Now let us see what Guyana received in the same year from two sources \u2013 the National Budget and the Natural Resource Fund.<\/p>\n\n\n\n

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As noted in the Table above, the total Government revenue in 2021 was $351,544 Mn. of which 76% came from tax revenues and 24% from oil revenues. Some brief points of analysis.<\/p>\n\n\n\n

  1. Inclusive of tax credits, the oil companies netted in 2021 from their Guyana operations, a total of $393,191 Mn. while the Government earned a gross sum of $351,544 Mn.<\/li><\/ol>\n\n\n\n