Latest update December 4th, 2024 2:40 AM
Exxon claims it will make no profit on US$1B investment in gas to energy project
Does this make economic sense???
Kaieteur News – Let’s say you are approached to invest one million dollars in an extremely profitable business venture. But you are told that you will only be repaid what you invested. You will receive no profit. Does that make sense? Would you invest your hard-earned money, only to receive dollar-for-dollar, while someone else cashes in on all the profits? Only a madman would do that, right? But this is what the PPPC government would have us believe Exxon is doing when it comes to investing in the Gas-to-Energy project.
What aren’t they telling us?
ExxonMobil has been bestowed the task of laying a pipeline from its Liza Phase One and Two projects offshore Guyana, to an onshore power plant at Wales. The company said that the estimated cost for the pipeline and accompanying facilities adds up to just under US$1B. According to Vice President, Dr. Bharrat Jagdeo, the pipeline will be funded through cost oil. This means Exxon, Hess and CNOOC will spend their own money on the project and their expenses will be repaid in barrels of crude produced from the Liza oilfield in the Stabroek Block. The amount of crude to be recovered would be equal to the value of the oil companies’ investment plus interest. More recently, Jagdeo said the government would be paying 48% of the companies’ investment back to them. But is that all that the companies are getting in return?
ExxonMobil’s Country Manager, Alistair Routledge has said that this is the best deal ever for a country. He said there is no profit element to the gas supply deal that will be signed between government and Exxon.
Basic economics teaches that a rational business will make decisions that maximize its profits. But when it comes to the apparent dollar-for-dollar deal the PPP would have the Guyanese public believe there is, there is no profit for ExxonMobil. So, what’s missing?
The PPP has not furnished the Guyanese public with the particulars of the financial arrangement it plans to enter into with ExxonMobil, which appears to evolve over time.
Recently, Opposition Chief Whip, Christopher Jones indicated that the Opposition has filed a motion in Parliament so that all agreements linked to the controversial project would be handed over.
He said the motion is submitted against the backdrop of the Government clearly spending huge sums of taxpayers’ money without notifying the people of Guyana what is the agreement between the Government and investors in the Gas to Shore project. Opposition Member of Parliament, Ganesh Mahipaul moved a motion, which was seconded by Jermaine Figueira, to have Parliament instruct Minister of Natural Resources, Vickram Bharrat, to hand over all documents related to the construction of the Wales Gas-to-Energy project and the Heads of Agreement signed on June 30, 2022.
“The claim that the project is not finalised yet cannot be of merit because billions of dollars have already been spent in 2022 and billions more have been budgeted to be spent in 2023. The conclusion is that this government is acting in secrecy and the people of Guyana elected me to ensure there is transparency and accountability for our money,” Jones said. In this regard, he is referring to the costs the government is incurring to develop the natural gas power plant and natural gas liquids facility at Wales, as well as transmission infrastructure and consulting fees.
It should be noted that G$24.6B was expended to meet startup costs associated with the project in 2022. This year, the government budgeted G$43.3B.
The Opposition said the government must come clean on what the agreement is and be open and transparent with the people of Guyana.
- Alistair Routledge, Christopher Jones, CNOOC, Exxon, PPPC Government, Stabroek Block, Two projects offshore Guyana
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