Transparency needed on billions ExxonMobil claims to be racking up on local content

Jan 17, 2021 News

By Kiana Wilburg

Kiana Wilburg

Kaieteur News – From 2015 to 2020, ExxonMobil’s subsidiary, Esso Exploration and Production Guyana Limited (EEPGL), has said it along with its partners and sub-contractors spent $69B on the hiring and training of locals as well as the procurement of goods and services from Guyanese companies.
But where is the evidence of this? In a perfect world where oil companies are the gladiators of public disclosure, one would be understandably mortified by ExxonMobil’s failure to provide details on its local content spending.
But in this dismal reality, one is never appalled that silence is the only answer to its five-year-and-counting calls for the company to release a breakdown of how many Guyanese have been hired and trained for senior positions as well as for their salaries to be placed alongside foreigners in similar positions. We cannot be surprised by ExxonMobil’s behaviour nor must we waste our energies hoping its voluntary disclosures or response to the media’s concerns would be improved.
What is unacceptable however is the failure of our leaders to be accountable on these matters. They are the ones hired by the citizenry to protect our interests.
ExxonMobil will be recovering every cent that it spends on whatever it deems to be local content. Yet, subsequent administrations have failed to establish the long-awaited Local Content Commission or even a committee to keep track of ExxonMobil’s spending, audit same, and make those audit reports public.
According to the Production Sharing Agreement (PSA), Guyana has with ExxonMobil subsidiary and its partners Hess Corporation and CNOOC/NEXEN, Article 18 – Guyana Resources specifically states, “Within 60 days prior to the beginning of each year or part thereof as applicable, the Contractor and the Minister shall provide a yearly plan for the utilization of qualified Guyanese resources for the upcoming year. Following the submission of the plan, the Contractor and the Minister shall meet to discuss and consider the effectiveness of the plan. The Contractor shall provide half-yearly reports submitted within 30 days after the end of each half-year to the Minister outlining its achievements in utilizing qualified Guyanese resources during the previous half-year and make appropriate adjustments to the yearly plan to better accomplish the goal of increasing the qualified resources available for use by the Contractor in its Petroleum Operations and other entities performing petroleum operations in Guyana.”
To date, Guyana does not know if the APNU+AFC regime made use of this reporting entitlement much less how effective it was in getting more disaggregated information and better achievements out of the operator. As a result, ExxonMobil can do as it pleases since it has been aided and abetted in its plan to dictate and deliver what it wants on local content.
Another sword in our side relates to how slowly we have been moving on the auditing of these costs. Guyana does not have a lifetime to audit local content expenditure among other things. According to the Production Sharing Agreement, the Minister responsible for the oil sector has only two years to audit the expenses the US supermajor incurs at the end of each fiscal year. In other words, the Minister only has up to 2017 to audit the company’s expenses incurred in 2015. And since we failed to make use of this auditing timeline, Guyana would have to accept as correct, whatever expenses the company incurred for the years, 2015 to 2018. In the area of local content, ExxonMobil had said that it spent US$1.7M in 2015, US$11.5M in 2016, US$23.8M in 2017, and US$58M in 2018. In total, this would be US$95M or $20B.
The People’s Progressive Party/Civic (PPP/C) has said that an audit is being done to look simultaneously at the exploration costs (US$460M) ExxonMobil incurred prior to 2015 as well as development costs incurred up to 2017 totalling US$1.6B of which the local content costs are included. It would be interesting to see whether the new administration would demonstrate that it intends to take a route different to its predecessor and publish reports regarding those audits. It would also be prudent for the administration to remove the fabric of secrecy that cloaks ExxonMobil’s local content efforts. Surely, the people of Guyana deserve transparency on this matter and all others related to the oil sector, which is known for being notoriously corrupt.

Discover more from Kaieteur News

Subscribe to get the latest posts sent to your email.

Latest News