Latest update November 15th, 2024 1:00 AM
Exxon grabs US$1 billon in cost recovery; Guyana gets US$219M
Jan to Mar 2023 oil revenue…
Kaieteur News – As the Government of Guyana (GoG) continues to hide the expenses being incurred by ExxonMobil for its activities in the Stabroek Block, the company has recovered a whopping US$1 billion during the first three months of 2023 alone.
This information is contained in the Bank of Guyana’s (BoG’s) first quarter report, available on the institution’s website. The second quarter report is not yet available.
According to the Bank, “Net foreign direct investments recorded a net outflow of US$1,020.0 million as a result of oil cost recovery (withdrawal of equity) by the oil and gas sector.” Governor of the Bank of Guyana, Gobind Ganga on Saturday confirmed with Kaieteur News that the sum was deducted by Exxon for its investments into the 26,800 square kilometers Stabroek Block.
Research conducted by this newspaper uncovered that during the same period Guyana earned a meager US$219 million. This sum included profits and royalties paid to the country.
The March 2023 Natural Resource Fund (NRF) Report, also available on the BoG’s website explained, “During the quarter, the Fund accounted for inflows amounting to G$45,756.17 million (US$219.45 million) comprising of profit oil – G$33,748.34 million (US$161.86 million) and royalties – G$12,007.83 million (US$57.59 million).”
It was reported that in 2022, the Stabroek Block generated US$9.8 billion, however, Exxon deducted US$7.4 billion, leaving Guyana with a mere US$1.4 billion inclusive of profits and royalty during the period.
Presently, ExxonMobil through its subsidiary, Esso Exploration and Production Guyana Limited (EEPGL) is producing an average 400,000 barrels per day at two of its five sanctioned developments, the Liza One and Liza Two. A third project, Payara is expected to come on stream later this year.
In the meantime, Exxon is utilizing the revenue generated from the two fields to recover its investments across the Block. In the absence of a ring-fencing provision, the company is allowed to use the revenue from the two projects to pay for expenditure related to other developments.
Through the Production Sharing Agreement (PSA) inked with the GoG in 2016, the company is allowed to deduct 75 percent of the monthly revenue towards the repayment of costs for the offshore deepwater projects. This process is referred to as ‘cost recovery’. The remaining 25 percent revenue is split as profits between the government and the partners.
Kaieteur News has been on the forefront of calls for government to release the cost recovery statements submitted by the developer to the state, since the nation is clueless as to what its resources are being used to finance.
At his most recent press conference on Thursday, Vice President, Bharrat Jagdeo was asked again by this publication whether he believes the citizens deserve to see what the oil, being produced at the Stabroek Block, is paying for. Jagdeo however told this publication that he would not be dealing with the issue again and in fact requested that the reporter move on to another question.
His response on the subject of Exxon’s expenses came shortly after the VP opened his media engagement by boasting of the PPP’s achievements since taking office in 2020.
He said, “The government of Guyana, the PPP Civic government has been engaged with fulfilling its Manifesto promises to the people of this country. We have demonstrated that we have achieved about 90 percent, in fact over 90 percent of all that we have promised.”
In its manifesto, the PPP promised, “To ensure that our oil resource is managed responsibly, the PPP/C will…ensure that expenditures are transparently determined and go through the parliamentary process.”
Notably, the government while in Opposition assured that the sector would be prudently managed in a transparent manner; upon assuming office in 2020, however, the new administration has taken a different approach. In several instances, the administration has demonstrated its intent to manage the sector in the dark.
Previously, the Opposition raised concerns regarding the lack of transparency in the management of Guyana’s blossoming sector.
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