Exxon gears for more pay increases as company makes highest profits ever

Dec 11, 2022 News

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…despite being a major asset, Guyana gets nothing

Kaieteur News – Despite being among the top assets in ExxonMobil Corporation’s portfolio, Guyana will receive no increase in revenue following massive profits earned by oil companies for this year alone.

Vice President Bharrat Jagdeo during a Press Conference held on Friday reiterated that all arrangements under the unfavourable provisions within the Production Sharing Agreement (PSA) between Guyana and the Stabroek Block partners, that there will be no renegotiation of the 2016 oil contract.

The Guyana Government has refused to bargain for a cut of the windfall cash ExxonMobil and partners have garnered from increased commodity price, even as it refuses to put specific safeguards in place to capture more cash in the local industry.

The Government maintains this position even as the US oil giant, along with its partners declare record breaking profits that are allowing for employee pay increases, stock buybacks, increased cash flow and increased returns for shareholders. ExxonMobil Corporation announced their second and third quarter earnings for this year amounting to the tune of US$17.9 billion and US$19.7 billion respectively.

Bloomberg said in an exclusive report that Exxon is gearing to award its US employees “above-inflation pay increases just weeks after the Texas oil giant posted its highest quarterly profit, underlining how strong 2022 has been for the fossil-fuel industry…” The American news agency said that workers will receive an average salary bump of 9 percent, and those who got promoted will see a further 5 percent increase.

It was related that “in aggregate, it’s Exxon’s biggest salary award in 15 years.” A spokeswoman for the company said to Bloomberg that the company is also set to give restricted stock options to 14,000 employees globally, which is more than a fifth of its total workforce and up from 5,000 workers last year.

It was noted however that the pay awards mark a turning point following three tough years for rank-and-file oil and gas workers as Exxon froze salaries and carried out its first mass layoff in decades. The company was said to have experienced a level of employee attrition above the historical norm and last year, it gave workers below-inflation pay increases, on average.

“But surging oil and gas prices following Russia’s invasion of Ukraine, combined with aggressive cost-cutting by Chief Executive Officer Darren Woods, have turned Exxon’s fortunes around. Profits in the second and third quarters were the highest in the company’s 152-year history,” Bloomberg related. Pay at Exxon is highly dependent on where an employee lies within the company’s performance evaluation system, with some top performers who got promoted receiving raises of between 15 percent and 25 percent”, company affiliates highlighted.

Earlier this week, Exxon disclosed that it also rewarded its top executives with a 10 percent salary boost. US employees also got one-time cash payment worth three percent of their annual compensation in June.

Even after a recent drop in crude prices, Bloomberg said Exxon’s stock is still up almost 70 percent. It noted too that Exxon has recently been able to re-enter the top 10 biggest companies on the S&P 500 Index.

Bloomberg noted that with a darkening economic outlook, it’s unlikely that all employees across the economy will be able to command inflation-matching wage increases next year. But oil workers appear to be among the winners as average hourly earnings in oil and gas extraction for nonsupervisory workers were up more than 13 percent in October from a year ago to almost US$42.

President Irfaan Ali last month announced an eight percent across the board retroactive increase for Public Servants and adjustments to the salaries of other state workers. He said that those to receive the increase include the Disciplined Services, Teachers, Constitutional Office Holders among others. The President had said that his Government continues to value the hard work of Government employees , but the respective Workers’ Unions have described the Public Servant salaries as ‘disrespectful’, ‘arbitrary’ and ‘minuscule’.

The Guyana Public Service Union (GPSU) said in a Press Release that the announcement was done in conflict with Constitution and Laws of Guyana, International Labour Organisation’s core Conventions and the Declaration of Fundamental Rights and Principles of Workers and the legally binding Collective Labour Agreements between the Guyana Public Service Union and the Government of Guyana.

The Union’s President, Patrick Yarde said that the Government is blatantly discriminating against the workers and totally ignoring the astronomical increase in cost of living and inadequate earnings. Yarde has stated that the Government can afford to give a decent pay increase but instead prefers to give handouts. The GPSU has filed court proceedings against the Government to adhere to collective bargaining.

Guyana Teachers’ Union (GTU), President Mark Lyte, also questioned the Government’s rationale for the pay 8 percent increase, “When the inflation rate in the country is over 50 percent.” He accused the Ali-led Administration of showing “its disregard for the rule of law by again ignoring the constitutional right of working-class people or collective bargaining.”

Stakeholders have contended that Guyana could pay its workers more, especially if it sought to garner more revenue from its oil deal with Exxon and partners. Industry experts and international officials have urged countries globally to initiate windfall taxes against oil companies’ “obscene” profits. Guyana has also been advised to plug loopholes in its lopsided contract to earn more revenue for the country, but the Ali-administration has insisted on keeping the same draining arrangement.

ExxonMobil announced Thursday that its investments next year will be in the range of US$23B to US$25B. The company said more than 70% of its budget will be deployed in strategic developments in the U.S. Permian Basin, Guyana, Brazil, and Liquefied Natural Gas (LNG) projects around the world. For Guyana, the American oil giant will have at least five major projects—Liza Phase One, Liza Phase Two, Payara, Yellowtail and Uaru—on stream by 2027.

It said some 90 percent of its Upstream investments that bring on new oil and flowing gas production are expected to have profits greater than 10 percent at prices less than or equal to US$35 per barrel. Exxon’s sanctioned projects in Guyana carry a US$25-US$35 breakeven price range, allowing the companies to rake in handsomely with higher oil prices.

Apart from the two percent royalty and the 50/50 split following the 75 percent expense recovery by Exxon, Guyana earns nothing more from its prolific US multi-billion dollar oil resource.

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