Guyana’s share of production from the Stabroek Block has increased significantly as the ExxonMobil-led consortium’s cost recovery has declined, with Guyana’s share now standing at approximately 39.8 per cent of production.
President Dr Mohamed Irfaan Ali highlighted the development during a press conference held at his Shiv Chanderpaul Drive office.
Guyana’s production-sharing formula has remained as it was in the 2016 Production Sharing Agreement (PSA).
However, the president explained that Guyana is now entitled to a larger share because the cost-recovery portion of production has fallen dramatically.
“This has occurred, as I said, because the cost bank has been recovered two years earlier than originally expected,” the president told reporters on Tuesday.
Under the 2016 agreement, royalty is taken first, followed by cost recovery of up to 75 per cent of production. The remaining oil, known as profit oil, is then split equally between Guyana and the consortium.
When Guyana’s oil production began, a much larger portion of each barrel was being used to recover the companies’ investment cost. In fact, President Ali said, “75 of every 100 barrels produced went to cost recovery.” Now that most of those costs have been recovered, only about 20 barrels of oil go towards cost recovery.
However, “While the US$55 billion expenditure was paid off, the cost bank is not saturated or entirely depleted. The 20 barrels today account for operating and other costs, which still form part of the cost bank,” President Ali further explained.
The remaining profit oil is split equally between Guyana and the consortium. Guyana’s current share amounts to approximately 39.8 barrels out of every 100 barrels produced.
The consortium receives approximately 39.8 barrels, which are shared among its co-venturers, which include Hess Guyana Exploration Ltd and CNOOC Petroleum Guyana Limited.
In addition to Guyana’s share of production, the country also benefits from a 2 per cent royalty under the 2016 Agreement.