Exxon tells Court it spent US$206M but only accounts for US$50M

Aug 09, 2023 News

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– Court documents in Gas-to-Energy case

Kaieteur News – Esso Exploration and Production Guyana Limited (EEPGL), the operator of the Stabroek Block, in its application to the High Court seeking to join the defence of its Environmental Permit for the Gas-to-Energy (GTE) Project claimed some US$206 million was spent on the initiative as of May 2023.

It was on those grounds that the Court considered EEPGL an interested party and allowed the oil company to join the matter.

Two months later, the company filed its Affidavit in Defence detailing that it had expended only a fraction of that amount. According to the Court document, EEPGL- commonly referred to as ExxonMobil Guyana- actually expended some US$50.67 million on activities related to the project.

In a detailed breakdown of the expenses, the company said, “To date, the second respondent has expended in excess of US$50.67 million upon the project, of which US$31.67 million on initial preparation of the plant site, US$8.75 million on construction of a material offloading facility, US$6.34 million on construction of a heavy haul road, US$2.88 million on construction of a site for the pipeline seawall crossing and US$0.94 million on improvement of West Bank Demerara public road and bridges.”

Back in May when the company filed its Notice of Application it stated, “To date, Esso and its co-venturers have expended US$206 million in design and construction works for the Gas to Energy Project. Further or additionally, Esso and its co-venturers anticipate spending in the region of an additional US$792 million to complete and commission the pipeline element of the Gas to Energy Project.”

The huge discrepancy in the figures presented by the company would raise concerns regarding the monitoring of expenses related to the project, even as ExxonMobil is yet to announce the Final Investment Decision (FID) or cost of the venture. Already, the GTE project is the country’s single largest financial venture ever pursued.

The government anticipates that the GTE project would cost US$1.7 billion. The state is also a party to the case defending the legality of the pipeline Permit granted to Exxon.

In its court documents seen by this publication, the Government of Guyana (GoG) told the High Court, “The investment in this project is in the vicinity of US$1,700,000,000 (one billion seven hundred million United States Dollars) and includes all associated project costs incurred under respective contracts by the GOG, its contractors, operators and co-venturers.”

The pipeline being constructed by Exxon is a component of the GTE project, aimed at reducing electricity costs by some 50 percent. Though the initiative is not backed by a feasibility study, the government is adamant that the project will deliver benefits to the Guyanese population. A 300-megawatt power plant and a Natural Gas Liquids (NGL) facility will be constructed at Wales, West Bank Demerara to generate the electricity which will then be transmitted to other parts of the country.

Head of the GTE Taskforce Winston Brassington had said the pipeline would cost about US$1 billion while the other two components of the project would cost an additional US$759 million.

Brassington explained that Guyana will be required to pay back ExxonMobil some US$55 million each year for 20 years to repay the company for its investment in the pipeline.

“That US$55 million is the amortized cost of US$1 billion for 20 years at a discount rate,” he said.

In addition to this, Guyana will also be expected to repay another US$51 million annually for 20 years on a loan the country will take to pay for the Natural Gas Liquids (NGL) facility and the 300-megawatts power plant.

Court case

On March 27, 2023, two citizens filed a legal proceeding in the High Court, challenging the Environmental Permit granted to Exxon for the pipeline component of the project. The 12-inch pipeline, some 225 kilometers will be used to transport gas from the Liza One and Two fields in the Stabroek Block to the Wales Development site.

Through their lawyers, Melinda Janki, Abiola Wong-Inniss, and Joel Ross, the citizens are seeking an Order of Certiorari to quash the decision made by the EPA to award an Environmental Permit to ExxonMobil Guyana to undertake the GTE project activities, on the grounds inter alia that the decision was in breach of the provisions of the Environmental Protection Act (Cap. 20:05), and more particularly, the Environmental Protection (Authorisation) Regulations.

The citizens outlined that ExxonMobil in its application, dated June 24, 2021 includes details of the project site, the proposed route of the pipeline and the areas to be used and affected by the project, which includes residential properties, commercial properties and state-owned properties. Be that as it may, the application did not include or provide any proof of ownership, a lease or other agreement with the land owners of the said area.

Notwithstanding, the EPA granted EEPGL a Permit to undertake the project on November 25, 2022. Subsequently, the Minister of Public Works, Juan Edghill in January 2023 passed various orders to acquire lands for the purpose of the project, pursuant to the Acquisition of Lands for Public Purposes Act, Chapter 62:05.

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• court, ExxonMobil, GTE

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