quote:Originally posted by Mr.T:
I have been reliably informed that CGX will be repaid by the Guyanese government for every single cent of the money that is spent on the drilling process. So there won't be any financial risks placed on CGX. Is that a common business practise in the drilling industry?
There is a risk sharing arrangement. If no oil ever flows, GoG takes certain losses and CGX absorbs their part. If commercial oil is found, special time limited tax breaks help CGX recoup their investment. It is not necessarily standard but every Govt makes arrangements which ensure the best deal. Prospecting company also negotiate in their interest. At this point in Guyana's oil exploration, risk sharing is critical.