Guyana loses US$1M daily in rental for 24 supply boats for Exxon

Aug 15, 2021 News

…Pays US$43,000 more per boat, per day than Suriname, T&T

Kaieteur News – Guyana in 2016 inked a Production Sharing Agreement with Esso Exploration Production Guyana Limited (EEPGL) and their partners Hess Guyana Corporation and China National Offshore Oil Company.Under that agreement, the operator EEPGL—commonly referred to as ExxonMobil Guyana—is allowed to recover up 100 percent of its exploration and other costs by deducting proceeds up to 75 percent of the production from the Stabroek Block.

One of the supply vessels currently in the employ of ExxonMobil

This publication recently reported that among the support services being utilised by ExxonMobil Guyana relate to the rental of up to 24 supply boats.
Research by Kaieteur News has since unearthed that when it comes to the prices being charged and recovered by ExxonMobil, the country is in fact losing out on in excess of US$1M daily on the supply of this single service for the operations in the Stabroek Block.
Guyana currently pays in the vicinity of US$55,000 per day for the rental of these vessels.
As such, it would mean that the cost of renting each of these vessels amounts to just under US$20M. Multiplied by 24, it would mean Guyana pays almost US$480M annually for the rental of these boats. Neighbouring Suriname and Trinidad and Tobago are also engaged in offshore oil and gas activities that require such supply vessels.
Their costs on the other hand are markedly lower than that being paid by Guyana.
Those countries pay in the vicinity of US$12,000 per day for use of those vessels. As such, it would mean that the cost for renting each vessel annually amounts to some US$4.3M annually, a whopping US$15.6M less than what Guyana pays for each vessel.
In contrast, Guyana in first full year of production saw the country earning some US$267M which means Guyana has lost more money on a single support service than it has earned in revenue.
The matter of bills being paid in relation to exploration and other expenses out of cost oil was recently flagged by the International watchdog body—the Natural Resources Governance Institute (NRGI)—as an area for which Guyana must pay keen attention given the prevalence of corruption found in contracts between suppliers and International Oil Companies.
In fact, according to NRGI research and analysis conducted on this matter, “found that 64 percent of petroleum projects reviewed in over 40 countries was over budget due to incidents of corruption.”
One area that saw such high cost overruns was exploration costs, said NRGI.
To this end, the international body has since pointed out that exploration costs for Guyana pre-2020 are estimated to be US$4.58B based on estimates provided by Rystad Energy, a Norwegian Consultancy.
Given what it has observed from its research, NRGI, which is headquartered in the USA, advised that Guyana should check these costs, which were racked up with suppliers to ensure they are correct.

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