New oil Law preserves status-quo of secrecy for ExxonM expenses

Jul 09, 2023 ExxonMobil, News, Oil & Gas

Kaieteur News – The proposed Petroleum Activities Bill put forth by the People’s Progressive Party Civic (PPP/C) administration to grant extensive powers to the Minister of Natural Resources, fails to address the pressing transparency concerns raised by civil society and the media over the last seven years. The government’s period for public comments on the bill has closed.

Be that as it may, one of the most pressing matters raised about the Bill is its failure to address once and for all, the veil of secrecy surrounding cost recovery. Last year, oil companies claimed nearly 90% of the oil extracted offshore Guyana under a 2016 production sharing agreement (PSA) that Guyana’s Vice President, Dr. Bharrat Jagdeo, has described as “shi**y.”

The agreement allows ExxonMobil and its partners to recover costs, categorised as cost oil, up to a limit of 75%. While assurances have been given that Guyana’s share will increase after cost recovery is complete, the specific timeline remains unknown. Despite the regular required submission of cost reports by oil companies to the PPP/C government, no information regarding projections has been disclosed.

The public, the press, and transparency advocates continue to be denied access to reports outlining the costs presented by ExxonMobil to the government, as well as the rate at which these costs are being recuperated. Despite repeated calls for transparency, these crucial details remain undisclosed. Hence, there is no way for the press to independently ascertain when Guyana’s share of production and revenues will increase, as is often claimed.

There is also no public record of how Exxon’s initial estimated costs for several of its projects, compares to the actual expenses. Thus far, it has been revealed to the public that the initial estimated cost of the Liza Phase One project was US$4.4 billion, which later reduced to US$3.6 billion. However, there has been no disclosure regarding how the actual costs of subsequent projects, such as Liza Phase Two (estimated at US$6 billion), Payara (estimated at US$9 billion), Yellowtail (estimated at US$10 billion), and the forthcoming Uaru project (estimated at US$12.7 billion), compare to Exxon’s initial estimates. Additionally, no disaggregated information is available regarding the costs associated with the exploration wells being drilled offshore Guyana.

The government has also failed to notify the public about how each lift of crude is allocated, though the offtaking of each lift is announced via the Maritime Administration Department (MARAD). To allocate the crude oil among the involved parties, the oil lifts are not divided based on calculated shares due to practical limitations. Instead, each party (Exxon, Hess, CNOOC, and the Government) receives a series of lifts over an extended period, aiming to roughly align with their entitled share. However, the government has not provided a formula or indication as to which entity each lift is allocated to, leaving the public without the means to independently determine the distribution.

As per the Stabroek Block Production Sharing Agreement (PSA), ExxonMobil’s local subsidiary, Esso Exploration and Production Guyana Limited (EEPGL), is obligated to submit its annual work program and budget to the government. Unfortunately, these reports have never been made public by the regulators.

When it comes to audits, while the government is implicitly responsible for conducting regular audits of the submitted costs, it took years for Guyana to initiate its first cost audit of Exxon’s pre-contract expenses in 2020. However, numerous delays and complications have led to significant confusion among the public regarding the final results of the examination of the US$1.6 billion in costs. In 2022, the government also awarded a contract to audit an additional US$7.3 billion in costs, with the final report expected in March. Despite promises of making the results public, previous assurances of this nature have gone unfulfilled.

Given the government’s posture on criticisms about transparency issues in the oil sector, it appears highly unlikely that such concerns will be incorporated into the amended draft. However, the Alliance for Change (AFC) has indicated that it will seek several amendments to the law in Parliament.

administration, expenses, ExxonM, grant, People’s Progressive Party Civic

Latest News

New oil Law preserves status-quo of secrecy for ExxonM expenses

Related

Similar Articles

The Glenn Lall Show | February, 3rd, 2025

Follow on Tik Tok @Glennlall

THE BLUNT OF THE DAY

Sports

EBDCA/D&R Construction 40-Over Cricket Competition continues

GFF announces final squad for Concacaf U-17...

Cricket West Indies announces exciting 2025...

BCA, GCB to attend CWI meeting on February 9

Bolstered Harpy Eagles eyeing perfect home record...

Hockey PAHF Junior Challenge schedule released

Features/Columnists

Land, taxes and penalties

OAS Secretary General Election and renewed OAS Consensus

Helping a brother traveling against traffic

Publisher’s Note

Weekend Cartoon

Bridge Watch

Demerara Harbour Bridge

> Berbice Bridge […]

New oil Law preserves status-quo of secrecy for ExxonM expenses

Share this:

Related

Similar Articles

The Glenn Lall Show | February, 3rd, 2025

Follow on Tik Tok @Glennlall

THE BLUNT OF THE DAY

Sports

Features/Columnists

Publisher’s Note

Weekend Cartoon

Bridge Watch

Demerara Harbour Bridge

> Berbice Bridge […]