Guyana-ExxonMobil contract makes no provision for proper disposal of Associated Gas

May 13, 2018 ExxonMobil, News

Chartered Accountant, Chris Ram

The Guyana-ExxonMobil agreement makes provisions for the discovery of Associated Gas, a form of natural gas which is found with deposits of petroleum. But if it is not found in commercial quantities, then the contractor and its partners may dispose of it in “the most economic manner.”
This finding has not only worried several local and regional environmentalists but also Chartered Accountant, Chris Ram.
Ram in his recent writings said that indeed, the Contractor may dispose of the associated gas in a manner that is consistent with good international petroleum industry practices, but “the contract emphasizes that this is provided that there is no impediment to normal production of Crude Oil.”
Ram, who does a weekly analysis of the Guyana-ExxonMobil contract, said that the absence of any specific language and requirement concerning environmental standards must be a cause for concern.
One “economic” means oil companies use to get rid of unwanted gas is gas flaring. This is a combustion device that is used to burn associated or excess gases and liquids. Gas flaring is a significant source of greenhouse gases emissions.
If this process is used, it would go against the very grain of Government’s “green”. Also of significance is the fact that Guyana, unlike many other countries, is without a no-flaring policy. But Natural Resources Minister Raphael Trotman has already announced that there will be no flaring.
Ram also said that all costs and expenses incurred by the Contractor in the production, use and/or disposal of the Associated Gas of an Oil Field and those incurred in carrying out any feasibility study on the utilization of the excess Associated Gas shall be charged to the Development Cost of the Oil Field and shall be Recoverable Contract Costs.
All costs incurred by the Government for the infrastructure and handling of excess Associated Gas which are not included in an approved Development Plan shall be at the sole risk and expense of the Government and will not affect the amount of Cost Oil and Profit Oil due to Contractor, he said.
The Chartered Accountant said that once again, the provisions of the Production Sharing Agreement (PSA) favour the company, leaving Guyana with little to no protection for its environment.