The Finance Ministry’s Report on Petroleum Production and Revenues January 2020 documents that to date, no royalty has been paid to the Guyana Government, although it projects earning US$1.2 million from sales in the first month of the year.
According to the report, ExxonMobil and its partners, China National Offshore Oil Company (CNOOC) and Hess Corporation Guyana Inc, produced in that month 1,745,930 barrels of oil, at a rate of about 56,320 barrels per day.
The Guyana Government, the report said, has elected to receive its two per cent royalty in cash and under the contract inked with the US oil major, the royalty due for that month is 20,506 barrels.
There were no royalty payments due in January 2020 as no petroleum was produced and sold in the previous quarter.
It was noted, however, that at the time of publication of the report, “the Government and the Contractor were still finalising the procedures…However, based on the current draft of the procedure, the average fair market price of crude for January 2020 would be US$61.87 per BBL (barrel).
As such, the value of the royalty for January 2020 would be US$1,268,706.
Under the Petroleum Production Agreement (PPA), royalty is to be paid 30 days after the end of each quarter, meaning payments for January, February and March will be made at the end of this month.
Providing a breakdown of the royalty payment due, the Finance Ministry, in its report, said during January 2020, there was one cargo lifted from Liza Destiny, by ExxonMobil, which amounted to 1,046,897 barrels.
It was explained that this lift included the 21,592 barrels of Marine Gas Oil and Intermediate Fuel Oil that was loaded onto the Liza Destiny in Singapore for commissioning activities and the remaining 1,025,305 barrels of crude lifted in January 2020.
The report said that the cost recovery ceiling – capped at 75 per cent of production – minus production costs and losses, amounted to 1,308,682 barrels.
According to the Ministry, given that recoverable costs are far in excess of the cost recovery ceiling for January 2020, all 1,025,305 barrels produced and sold from the Liza field was allocated to cost oil.
As such, the 719,605 barrels remaining after the allocation to cost oil, (ie 1,744,910 – 1,025,305) is classified as profit oil, of which the Government is entitled to 50 per cent, or 359,802 barrels.
The report noted further that since Government was not allocated any cargoes in January 2020, it would have under lifted 359,802 barrels that month, which, when combined with the previous month’s under lift of 92,633 barrels gives a cumulative under lift of 452,435 barrels at the end of January.
On the other hand, the contractor lifted one cargo in January 2020, but was still under lifted by 338,211 barrels and when combined with the previous month’s under lift of 71,040 barrels, the contractor cumulatively under lifted 409,251 barrels at the end of January 2020.