Latest update February 6th, 2025 7:27 AM
Exxon’s unaudited local content bill climbs to $19B
Kaieteur News – ExxonMobil Guyana has announced that its local content spending has now moved to $19 billion for the first half of 2021, but has yet again failed to provide a transparent and detailed breakdown of how the money it claims was spent.
The company in a statement yesterday noted vaguely that the hefty $19 billion was spent on more than 750 Guyanese vendors of goods and services ranging from foodstuff to engineering and that has generated, either directly or indirectly, an economic impact of $23.1 billion.
Additionally, it said since 2015, a total of $96.4 billion has been spent directly with Guyanese suppliers.
But with no evidence provided to show exactly how the money was spent, per the terms of the Stabroek Block Agreement with ExxonMobil and its partners, CNOOC and Hess Corporation, Guyana would have no choice but to pay the sum.
And even as the subsidiary gears to hand this bill to Guyana, the government is yet to audit the company’s local content bills for 2020 and 2019 which amount to $31.9 billion and $24.3 billion respectively.
As per the PSA, the state has a two-year deadline within which to audit these costs and if that time elapses, the costs have to be accepted as correct. It, therefore, means that Guyana has up to the end of 2021 to audit the local content bills for 2019 and up to 2022 to complete the audit for expenditure, which the company claims was made in 2020.
But Guyana failed to audit, in a timely manner, the costs the company incurred for 2015 to 2018, said to be $20 billion, and hence those have to be considered as correct.
ExxonMobil Guyana said too in its statement that as of June 2021, 2,865 Guyanese were supporting the company’s overall activities, representing 53 percent of the total workforce.
It said that its Guyanese workforce grew by 38 percent to 2,865 at the end of June 2021 from 2,070 in June 2020 – and includes 568 women.
Local content is the value that an extraction project brings to the local, regional or national economy beyond the resource revenues and this definition is supported by the Natural Resource Governance Institute (NRGI). But the anti-corruption watchdog has oftentimes said that a challenge with local content is that it can open the door for corruption and elite capture of an industry. It pointed out too that corrupt public officials can position themselves to benefit from oil companies’ contracts, and private local companies can partner with oil companies to create a false impression about the contractor’s local content efforts.
Because of this, Kaieteur News has long challenged ExxonMobil to provide transparent, detailed breakdowns of how the money it claims was spent but to no avail.
ExxonMobil Guyana President, Alistair Routledge, in the statement, reaffirmed the company’s commitment to working collaboratively with the government to support the development of a framework that manages local content in a realistic and sustainable way.
He said, “We are proud to have been able to deliver these local content figures which are a reflection of tangible progress.”
Routledge added that, “further growth is expected and ExxonMobil will continue to work with Guyanese businesses to build local content together.”
With three sanctioned projects in Liza Phase 1, Phase 2 and Payara, and a fourth project, Yellowtail up for approval, the ExxonMobil Guyana President said that “timely approvals and processes” are vital to local content development.
“It is important to identify and invest in successive projects that allow for the expansion of efficient operations to provide sustainable employment opportunities, local business growth, and broader economic development across Guyana,” he added.
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