Advance monies from oil companies will be treated as a donation to Guyana

Advance monies from oil companies will be treated as a donation to Guyana – Jagdeo

Oct 12, 2018 News

Drillship Noble Bob Douglas

Opposition Leader, Bharrat Jagdeo, believes that the Government is contemplating taking an advance from United States oil giant, ExxonMobil, ahead of oil production in 2020.
“We have not even started producing oil and I heard that they want to seek an advance payment, a large sum,” Jagdeo declared yesterday at his weekly press conference.
However, the Opposition Leader noted that he does not have a problem with taking advance monies from ExxonMobil, but warned that the People’s Progressive Party (PPP) will not treat the pre-production money as being cost recoverable.
“Let me say to the oil companies that any money given to our Government before the start of production of oil, which will be recoverable after we start against oil; we will in the PPP will treat that as a donation or an increase to the signing bonus, not recoverable from cost oil,” Jagdeo stated.
The Opposition Leader was asked on what legal grounds the PPP will use to pursue this course of action.
He replied, “You will see the legal grounds in the future because we are making it clear. This will be seen as a donation to the country. We haven’t started producing oil as yet. These are not companies that make loans. They are not financial institutions. If they do that they are doing it with a motive,” Jagdeo noted.
Minister of Governance, Raphael Trotman, had previously expressed the view that taking the money and using it for infrastructural developments will prove highly beneficial for an underdeveloped country such as Guyana.
Trotman was previously quoted in sections of the media as saying that Exxon’s President and the Government were to enter into negotiations about advance monies.
Jagdeo has been critical in the past about monies taken from ExxonMobil. He questioned how can Guyana sit and negotiate with the oil company on an equal footing if they accept an advance.
“If they are a financial institution that’s different; financial institutions makes loans or grants. So when an oil company says that we are giving you money up front that must be for some other purpose and especially when you haven’t started producing oil,” Jagdeo stated.
The Guyana reserve is one of ExxonMobil’s biggest assets worldwide.
Discoveries of over four billion oil-equivalent barrels were made on the Stabroek Block. Discoveries were made at Liza, Liza Deep, Payara, Snoek, Turbot, Ranger, Pacora and Longtail with the potential for up to five floating production, storage and offloading (FPSO) vessels producing more than 750,000 barrels per day by 2025.
The Stabroek Block is 6.6 million acres (26,800 square kilometres). ExxonMobil affiliate, Esso Exploration and Production Guyana Limited, is the operator and holds 45 percent interest in the Stabroek Block.
Hess Guyana Exploration Limited holds 30 percent interest and CNOOC Nexen Petroleum Guyana Limited holds 25 percent interest.