In the event of an oil spill, Hess only has GYD$66M in local subsidiary’s bank account

Jun 27, 2021 News

– Billions in profits moved to American parent company – Chris Ram

Chart showing Hess Corporation’s profits vs. the balance left in its subsidiary’s bank account.

Kaieteur News – At the end of 2020, Hess Guyana Exploration Limited (Hess), transferred $6.9B in profits to its parent company in the USA, Hess Corporation, which was made from its 30 percent working interest in the oil rich Stabroek Block.

Hess Corporation CEO, John Hess

Following this, all that was left in its bank account was $66M. It therefore means that should Guyana suffer an unmitigated oil spill in the Stabroek Block, these are the meager resources it would have to depend on since the parent company has failed to give Guyana full coverage insurance for the Liza Phase One Project.
Exposing the state of the company’s financial affairs and what it means for Guyana was Chartered Accountant and Attorney-at-Law, Christopher Ram, in his column called, “Every Man, Woman and Child in Guyana Must Become Oil-Minded.” In one of his publications, Ram said he had examined the 2020 financial statements of the subsidiary and was appalled at the findings.

Chartered Accountant, Chris Ram

Ram said he found that the total value of assets of the Branch at year-end was $469,363 million of which property, plant and equipment accounted for 91%, with the remainder spread fairly evenly over cash, receivables and deferred income tax asset. He also discovered that at December 31, 2020, Hess is shown as having an advance to ExxonMobil’s subsidiary, Esso Exploration and Production Guyana Limited (EEPGL), of some $13,167 million while an amount of $14,879 million is shown as owed to Esso.
He also found that, “The Branch’s bank balance at year end was $66 million while its commitments for capital expenditure on the Stabroek Block was approximately $544.0 billion (United States Dollars: $2.6 billion), to be incurred over the next several years.”
Ram said it is unclear where this money will come from since at December 31, 2020 even the parent company’s cash resources stood at US$1,739 million while its total debt and lease obligations stood at US$8,534 million.
Upon noting the foregoing, Kaieteur News asked the lawyer if it is not more than enough for Guyana to pressure the parent company to give a formal agreement and evidence that it will handle the costs associated with any oil spill. Ram answered in the affirmative while adding, that it is necessary that the company demonstrate that it has the necessary funds for future projects.
If Guyana fails to do this, Ram said Guyana could expect Hess to take more loans to finance future projects, which the country would ultimately have to pay for along with the interest rates.

2 thoughts on “In the event of an oil spill, Hess only has GYD$66M in local subsidiary’s bank account”

Jorge Abukhalil June 27, 2021 at 6:59 am

Unfortunately oil spills’s solution are not only about money in the bank, you need to have the proper tools in place before the ocean waves spread the fuel, it will take about 2 weeks to charter a first response oil spill vessel and it would be too late, 2011 new horizons oil spill in Tampa they have spend over $60 billion and 10 years later we can see death fish and the massive ecosystem destruction! This is not just a matter of dispersants, you need to confine the oil, suction ? Separate the water , Clean the water , discharge the water to the ocean and store in 24 hours or the disaster is irrepressible …
Jorge Abukhalil June 27, 2021 at 7:04 am

Oil Spill Response Techniques
A number of advanced response mechanisms are available for controlling oil spills and minimizing their impacts on human health and the environment. Damage to spill-contaminated shorelines and dangers to other threatened areas can be reduced by timely and proper use of containment and recovery equipment. The following techniques may be used during an oil spill:

Mechanical containment or recovery is the primary line of defense against oil spills in the United States. Containment and recovery equipment includes a variety of booms, barriers, and skimmers, as well as natural and synthetic sorbent materials. Mechanical containment is used to capture and store the spilled oil until it can be disposed of properly.
Chemical and biological methods can be used in conjunction with mechanical means for containing and cleaning up oil spills. Dispersing agents and gelling agents are most useful in helping to keep oil from reaching shorelines and other sensitive habitats. Biological agents have the potential to assist recovery in sensitive areas such as shorelines, marshes, and wetlands. Subpart J of the National Contingency Plan (NCP) establishes the process for authorizing the use of dispersants and other chemical response agents. Subpart J also includes the NCP Product Schedule, which is the federal government’s listing of chemical countermeasures that are available for use during or after an oil spill response.
Physical methods are used to clean up shorelines. Natural processes such as evaporation, oxidation, and biodegradation can start the cleanup process, but are generally too slow to provide adequate environmental recovery. Physical methods such as wiping with sorbent materials, pressure washing, and raking and bulldozing can be used to assist these natural processes.
Scare tactics are used to protect birds and animals by keeping them away from oil spill areas. Devices such as propane scare-cans, floating dummies, and helium-filled balloons are often used, particularly to keep away birds.