‘Leaders must come clean over recovery of royalties’ - Glenn Lall

‘Leaders must come clean over recovery of royalties’ – Glenn Lall

Jun 22, 2022 News

…queries whether ExxonMobil reclaimed US$18M signing bonus

Kaieteur News- Amid growing concerns as to whether ExxonMobil is recovering the 2% royalty it pays to Guyana for its oil, Kaieteur News Publisher, Glenn Lall, has called on the country’s leaders to speak definitively on exactly what is the situation. He has also queried whether the controversial, US$18M signing bonus Exxon paid to Guyana back in 2018 was recovered by the oil major.
Kaieteur News has examined the Production Sharing Agreement Guyana signed with Exxon pertaining to recoverable and non-recoverable items. In the latter category, there is no explicit listing of royalty being an unrecoverable item. It is crucial to note that oil companies such as ExxonMobil have paid US$3 billion over the past 15 years to resolve a range of charges including that they regularly cheated the U.S. government and Native American communities out of royalties on oil and gas leases, raising concerns they use similar techniques to rob citizens in poor countries of resource wealth.

Kaieteur News Publisher, Glenn Lall

Further research on Exxon’s treatment of nations on royalty payments further underscores the need for authorities here to be extremely cautious. According to a 2010 publication by the Oil & Gas Journal, ExxonMobil Corp. had agreed to pay a US$32.2 million federal fine to resolve a whistleblower’s claim that its affiliates knowingly underpaid natural gas royalties on federal and American Indian leases.
The US Department of Justice had said the claim arose from allegations that Mobil Natural Gas Inc., Mobil Exploration & Producing US Inc., and their affiliates systematically underreported the value of gas taken from the leases from March 1, 1998, to November 30, 1999, and consequently paid less in royalties to the federal government and various Indian tribes. At the moment, Guyana is conducting audits of Exxon’s post 2017 bills which total US$9B. The consortium, which is made up of local and foreign auditors, is reportedly expected to complete same in four months. It is unclear if the team would be examining said bills to ensure royalty is not being recovered or if royalties were underpaid.
The issue of royalty recovery came to the fore and became a matter of concern when Kaieteur News reporters, during their coverage of the recently concluded Trinidad and Tobago Energy Conference in May, found out that for 60 years, the oil operator there was giving the twin nation royalty payments on one hand and recovering it on the other. This unfortunate situation, it was explained, befell the CARICOM state after it failed to detail explicitly what costs are recoverable by the oil company in the sharing agreement.
Vice President Bharrat Jagdeo was unable to be pellucid as to whether ExxonMobil’s subsidiary Esso Exploration and Production Guyana Limited (EEPGL) is in fact recovering the sums paid as royalty. When asked the question at his last press conference, the Vice President told this newspaper that he did not want to make a statement that he might have to retract. He preferred to leave the question in the capable hands of the nation’s tax and legal authorities/guardians. “I don’t want to venture public positions that I may have to walk back on at some point in time so I will be a bit cautious on this,” he told the newspaper.
Opposition members were asked the same question. Leader of the Opposition, Aubrey Norton told the Kaieteur News that the Stabroek operator should not be able to recover the two percent royalty. “If it is royalty, it cannot be recoverable,” the Leader said. He added that the Stabroek block PSA doesn’t make royalty recoverable, but the smaller blocks have an unusual clause in place that makes royalty recoverable in that regard. Former Minister of Infrastructure, and current Shadow Oil and Gas Minister, David Patterson also told the Kaieteur News that the two percent, “is not supposed to be recoverable.” He told the Kaieteur News that according to his understanding of the PSA, Guyana’s two percent royalty is not supposed to be recovered by the oil company.
Leader of the Alliance For Change and former Security Minister Khemraj Ramjattan in his contribution submitted that during the Coalition government’s handling of the PSA, there was no provision in the document for Exxon to reclaim the two percent royalty. As such, he said, he is “unaware” that the payment is recoverable. Ramjattan added too that if the oil company is in fact reclaiming the royalty, it “goes against the contract”, in his view. Winston Jordan, who was Finance Minister under the last administration, told the Kaieteur News, “absolutely not,” that the two percent royalty is not recoverable by the oil companies. He even mentioned that the oil company itself has stated that the two percent royalty is coming out of its profit.
Not focused
Meanwhile, addressing the issue on his radio programme: The Glenn Lall Show Monday night, Lall did not mince words calling out the Guyanese leaders for being at sea on the very important issue. He lamented that the country was already being short-changed on a lopsided contract and even with the meagre royalty, the possibility of it being recovered by the oil company is frightening. “We are all waiting on the ‘Oil President, VP Jagdeo, to send out a release or to talk to this nation on this royalty issue. I see them running around the country spending hours busing and cussing down the PNC and you are not hearing a single word from him on what he is doing for us to get more from this oil wealth.”
Lall said what the politicians are engaged in by “cussing and busing down each other” is a clear case of distraction from what is going on with your oil wealth.”
“This attitude was described nicely by a Trinidadian when he said the politicians in T&T were using a soft touch approach when it comes to the oil industry,” Lall said, “This is why T&T was short-changed not only with the royalty, but they later found out that down to the bonus money T&T received was snatched back by the oil companies, unknown to them. This brings me to the question: Did ExxonMobil take out the US$18M signing bonus back from Guyana?”
Jagdeo, according to Lall, is in the best position to tell the nation that, but instead “he spent months cussing down the PNC for hiding that from the nation and you hear little to nothing from his mouth on this oil industry, matter of fact the only time you hear this man say something is when he is asked questions about the oil and you hear the type of answers he gives..” a frustrated Lall lamented.
Leaders in the dark
On the issue of the leaders being uncertain as to whether the royalty is recoverable, Lall said he was ashamed of them. He said too he was astounded to hear Ramjattan repeating himself when he was re-elected last week, saying Guyana got a good oil deal. “That’s what you call the soft touch approach that caused T&T and many other oil producing countries to be where they are today. Silence makes the oil companies happy and keeps the nation stupid.”
Lall also addressed, the controversial decommissioning.
He noted that “one single expense the oil company taking out in two years is more than half of what Guyana gets for the two years. “Them (oil companies) took out US$355M and Guyana gets US$607M, then Guyana allow ExxonMobil to keep the US$355M to be used 20 years from now for cleanup, while Ali, Jagdeo and Ashni Singh along with the Opposition went to the UK and CDB for US$190M to build the Mabura-Linden Road, then another US$100M to build the East Bank (Demerara) road what the oil companies breaking up every hour. This is the good deal Guyana get with the oil company, Ramjattan, Norton and Jagdeo? Indebting this country every day with loans to facilitate the oil companies that are taking back your royalty and signing bonus?”