ExxonMobil ‘concerned’ about US$13B investment in Stabroek Block if loses case to Glenn Lall

Apr 25, 2022 News

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Kaieteur News – Exxon Mobil‘s subsidiary Esso Exploration and Production Guyana Limited (EEPGL) and its partners said they have already invested over USD$13 billion for oil drilling activities in the Stabroek Block.

This is outlined in an affidavit filed on behalf of EEPGL in response to the legal challenge brought by Kaieteur News Publisher, Glenn Lall against the Government over the granting of extensive tax waivers to the oil companies and its affiliates. It must be noted that the oil companies will recover most of the investment based on the oil contract the Guyana Government signed with them.
Lall is challenging the agreement for Government to waiver the taxes on the ground that it is discriminatory, violates the constitution, results in massive losses of revenue for Guyana and should be overturned. In the court document, Exxon Mobil Subsidiary is arguing that if the Court rules in Lall’s favour, it would result in massive losses to the company and its co-venturers (partners). The company outlined the expenditures required to execute each project total in the billions. According to its sworn document, the company underscored the significant ongoing expenditure related to exploring for hydrocarbons in the Stabroek Block.
The company explained that it has three approved petroleum projects progressing known as the Liza Phase 1 Development Project, the Liza Phase 2 Development Project and the Payara Development Project. In addition to this, EEPGL said it has applied for necessary government approvals and expects to receive Government approvals for the Yellowtail Development Project and has begun the application process for the Uaru Development Project.
The company explained therefore, that based on its projections that expenditures required to execute the Liza Phase 1 Project, are expected to total approximately USD $4 billion. The expenditures required to execute the Liza Phase 2 Project are expected to total approximately USD $6 billion. As a result, the expenditures required to execute the Payara Project are expected to total approximately USD $9 billion.
The expenditures required to execute the Yellowtail Project are expected to total approximately USD $10 billion. As such, EEPGL calculated that from the effective date of the Petroleum Agreement on the 7th day of October 2016, Esso and its co-venturers have incurred and spent over USD $13 billion on the Projects as well as exploration, development and production activities. The company noted that “this is all as a result of the solemn agreements, most importantly the Petroleum Agreement, between Esso, its co-venturers and the Guyana Government.”
It continued that “Esso is presently engaged in carrying on one of the most significant worldwide investments in petroleum exploration, development and production activities, occurring in the Stabroek Block, located in the Exclusive Economic Zone of the Co-operative Republic of Guyana.”
In addition the company explained in the affidavit that “the Petroleum Agreement has been in the public domain since in or around the month of December, 2016. Since that time, Esso and its co-venturers have been steadily carrying out the development programmes required to bring these projects to production, and have incurred costs at USD $13 billion.” As a result, the company submitted that “If the reliefs sought by the applicant are granted, it would be inconceivable that the projects could be carried out by Esso in the form they are designed. There would be billions of $US dollars in additional costs which could well cause the projects uncommercially viable or infeasible.”
The submissions were made even as the High Court set a timeline within which it will hear the oil tax case. The matter is set for continuation before Justice Nareshwar Harnanan at the High Court in Georgetown on August 12, 2022. As such, Lall’s Attorney Mohamed Ali is expected to file submissions in response to the defence brought by the Government and EEPGL on or before June 3 while the respondents, Government of Guyana and EEPGL are expected to file their answers by July 1. All final written arguments are scheduled to be filed by July 29 and August 12, 2022 is set for oral arguments.
On August 12, attorneys from all sides will be given at least 20 minutes to present their case before the court, after which the Court is expected to rule on September 9, 2022. Back in January, KN’s publisher filed the case which seeks to overturn the expansive tax provisions granted to the oil companies as part of the Production Sharing Agreement (PSA) for oil drilling exploration in the Stabroek Block. Among the grounds, Lall lists his main contention as the provisions of the agreement violate the Petroleum Act, by purporting to extend production sharing concessions to persons other than those licenced.

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