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Oil companies would only pay GYD$1,000 fine for breaching customs licence
The first Floating Production, Storage and Offloading vessel (FPSO) set to produce oil from the Liza-1 project, the Liza Destiny, has now been appointed as a sufferance wharf and private warehouse.
Liza Destiny is the first oil production vessel in Guyana.
But even though that now means ExxonMobil and other oil companies would be bound by certain procedural regulations in their loading of the vessel with goods, the penalty that they would have to pay if they broke those rules is a miserly GYD$1,000, according to the Customs Act.
The Guyana Revenue Authority (GRA) published a notice of the appointment, pursuant to the Customs Act issued under Section 2 and Part 4 of the Act.
A sufferance wharf is a place other than an approved place of loading and offloading by the Revenue Authority, where a senior customs officer may by discretion and under certain conditions allow the loading and offloading of goods.
That now subjects the Liza Destiny vessel to all customs regulations, which concern sufferance wharves.
For instance, if the lessee of the vessel, ExxonMobil, wishes to load goods there, it will have to furnish GRA with particulars on the intended goods. ExxonMobil will have to maintain certain conditions as required by the Revenue Authority to maintain the licence allowing it to board goods on to the ship.
Those regulations are catered for in Part V of the Customs Act. The Act, outdated as it is, states in Article 134 that if the requirements are not observed, the master of the ship shall be liable to a fine of one thousand dollars, unless the company can sufficiently justify the breach to the customs officer.
A fine of GYD$1,000 would mean nothing to an oil company like ExxonMobil, whose turnover amounts to billions of US dollars a year. This absurdly low fine is just a microcosm of a wider state of unpreparedness in Guyana’s legal framework to manage the Oil and Gas Sector and bring powerful oil companies to their heel.
The Liza Destiny is currently owned by Guyana Deepwater UK Limited, SBM’s Offshore local subsidiary, but is leased to ExxonMobil. SBM is currently constructing the second vessel of that nature for the Liza-2 project, the Liza Unity, in a deal that was closed with ExxonMobil in October for US$1.14B. SBM is also currently handling the front end engineering design (FEED) for the Liza Prosperity, intended for the Payara oilfield.
The field development plan for that project is still subject to government approval.
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