Citizens question ExxonM’s US$50 million expense on Wales gas project – in Court document

Aug 13, 2023 Court Stories, ExxonMobil, Features / Columnists, News, Oil & Gas

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Kaieteur News – Esso Exploration and Production Guyana Limited (EEPGL), the operator of the Stabroek Block that was granted an Environmental Permit to undertake works related to the Gas-to-Energy (GTE) project recently told the High Court it has already expended over US$50 million in development works.

The company however did not provide any documentation to support this claim, a move that has been criticized by the applicants challenging the Permit as lacking any credibility.

EEPGL, the subsidiary of American oil giant ExxonMobil, in its application to the High Court dated May 4, 2023 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.”

In a subsequent submission to the Court dated July 14, 2023, 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.”

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.

Vanda Radzik and Elizabeth Hughes who filed the legal challenge against the Environmental Protection Agency’s (EPA’s) decision- to award a Permit for the pipeline works to Exxon-responded to the oil company’s claims on expenditure incurred so far in an application to the High Court dated July 28, 2023.

The applicants reasoned, “The Deponent now asserts that Esso has spent more than US$50 million on the Gas to Energy project. Moreover he has produced no supporting documentation, no bills, no receipts and no independent verification. Given the magnitude of this assertion, the Deponent’s failure to provide even one piece of paper robs his statement of any credibility.”

During Wednesday’s Sitting of the National Assembly, Opposition Member of Parliament Volda Lawrence asked Senior Minister in the Office of the President with Responsibility for Finance, Dr. Ashni Singh to tell the House how much has been spent by Exxon on the project to date. Notably, the Finance Minister did not respond to her specific concern, but instead addressed spending by government on the project.

He said, “In relation to the construction of the power plant and associated investment including the T&D (transmission and distribution), those investments are being financed by the government of Guyana out of the budgetary appropriations that the Budget has approved and now these supplementary appropriations being sought.”

Former Minister of Public Infrastructure, David Patterson followed up on the response and asked the Minister to disaggregate the sum that has been expended on the activities so far, but Dr. Singh committed to providing the information to the Assembly at a later date.

It must be noted that the GTE project features three components including the pipeline being developed by Exxon along with the Natural Gas Liquids (NGL) facility and 300-megawatt power plant being pursued by the Government of Guyana (GoG).

Exxon will be funding the 12-inch pipeline that will transport the natural gas to the Wales Development site, West Bank Demerara (WBD). In the meantime, government has pursued the United States Export Import (US-EXIM) Bank for a GY$134 billion (US$646 million) loan to finance the other two components. There has been no indication so far that the application was approved by the financial institution.

Court case

On March 27, 2023, Radzik and Hughes 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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• case, court, credibility, expense, GTE

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