The International Monetary Fund (IMF) has advised the government of Guyana to tighten up its tax laws and get better deals from oil producers in future after the highly favourable terms given to Exxon-Mobil on its project offshore the South American nation, according to Bloomberg.
Guyanese officials have acknowledged points made in an IMF report made for them. While insisting that the Exxon deal will stand despite being more generous to the energy firm than normal international standards, Mineral Resources Minister Raphael Trotman said: “For future contracts we will certainly be having updated terms.”
Guyana is a new player in the global oil business and Exxon has been the supermajor most associated with it, making the first significant find in the Stabroek Block, 120 miles offshore, in 2015.
Exxon, which is in partnership with Hess Corporation and CNOOC, has 11.5 million acres in Guyanese waters and anticipated output is such that government revenues from the first project should reach as much as $700 million per year by the late 2020s.
In December 2017 the government released details of the Exxon contract which gives Guyana a 2% royalty on sales and 50% on profitable oil once costs are repaid.
The IMF, Exxon and Guyana all accept that it is not unusual for early risk takers to receive more beneficial fiscal terms.
Other firms exploring the waters, some of which are disputed by neighbouring Venezuela, include Total, Repsol and Tullow Oil.