Jagdeo maintains company’s work was interrupted during pandemic

Oct 27, 2023 ExxonMobil, News, Oil & Gas

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Despite Exxon’s US$58.5M COVID bill…

Kaieteur News – Vice President Bharrat Jagdeo has maintained that Exxon provided evidence that work was interrupted at their operations during the Covid-19 pandemic, as he further justified the extension of the oil major’s hold on 20% of the Stabroek Block which it should be giving up this month based on the Production Sharing Agreement it signed back in 2016 with the Guyana Government.

Exxon was expected to return a portion of that oil rich block to the country this year that could have been auctioned, however, former President David Granger had issued an extension during the COVID-19 Pandemic period in 2020 before he left office. The extension required the operator to provide proof that its work programme was indeed impacted. Jagdeo at previous press conferences said that Exxon had supplied evidence to justify the extension, but he did not need to provide this to the public. During an August press conference at Freedom House, he said “Exxon brought in information and gave a full report to the Ministry [of Natural Resources] on how their original [exploration] plan was affected from six rigs down to four because two could not be mobilized.”

He continued, “So they demonstrated how COVID affected them. It is the David Granger extension that therefore shifted the timeline to relinquish 20 percent of the block from 2023 to 2024 and that is the consequence we are living with.” When asked about sharing this evidence publicly, the VP said, “We don’t have to give evidence to AFC.” The chief policymaker for the sector was also not inclined to make government’s reports on this matter public to ease tensions of other stakeholders. He said the fact of the matter is that an extension was granted and the government did not extend it. Despite calls from sections of society, the government has kept those documents close to its bosom, therefore leaving Guyanese to question its decision.

However, when confronted at his press conference held on Thursday last,  about ExxonMobil billing Guyana US$58.5M for Covid-19 related expenses as proof that the company was working during the period it claimed it was affected, Jagdeo maintained that the evidence provided to government by the oil company was enough. “We just said you have to supply to us the information as to the planned activities and how they were not carried out.” He went on to say that, “Where there was departure from the planned activities, they have supplied evidence to that effect saying these are the number of wells in our plans to drill here, we didn’t get to do all of these.”

The Vice President noted that it is a fact that Exxon was “spending money to keep operations going in the period of the audit, to put people at the hotels and quarantine their staff and then flying them back out to the FPSO, is a measure that they took. Now our auditors had issues with their cost, and what it was provided for. So that has to be the magnitude of their claims and the veracity of their claims would have to be demonstrated.”

Jagdeo’s response to the question asked by Kaieteur News’s reporter, comes in the wake of the audit report into the sample of expenses for the year 2020, where auditors found that Exxon had used an astonishing US$58.5 M from the Stabroek Block revenues, for Covid-19 related expenses. The audit into ExxonMobil Guyana’s expenses for the year 2018 to 2020, uncovered that a significant portion of the US$58.5 million in Covid-19-related bills was allocated to chartered flights, amounting to US$18 million. The auditors concentrated solely on the initial year, 2020, when the Covid-19 pandemic first hit Guyana.

The auditors discovered that the Covid-19 costs incurred were not confined to Guyana alone but extended to locations including Houston, the United Kingdom, and Trinidad and Tobago. The costs were meticulously catalogued in separate files, notably including Houston Facility costs, United Kingdom (UK) Facility costs, Flights, Guyana Facility, and more.

It was unveiled that 90% of the Covid-19-related costs were charged to the Stabroek block account, with Canje and Kaieteur (a block from which ExxonMobil had walked away earlier in the year) shouldering the remaining 10%. Further insights into the breakdown of charges reveal that Exxon billed approximately US$9 million for recoverable hotel and hotel-related costs, with a substantial portion allocated to the Atlantic Hotel (Marriott) in Guyana, encompassing blocks of rooms, whether occupied or vacant. Other hotel-related expenses covered Cara Lodge and Pegasus Hotel in Guyana, in addition to hotels in Trinidad, the United Kingdom, and the U.S., all used for quarantining individuals before their journey to Guyana.

Exxon’s charges also extended to approximately US$18 million for Covid-19-related chartered flights, covering elements like travel voucher taxes, pre-flight Covid-19 tests, aviation fuel, and in-flight catering. Chartered flights from London, executed by British Airways, accounted for US$1.3 million, while flights from Houston, operated by United Airlines, incurred US$1.2 million in expenses. The auditors further exposed that Exxon billed approximately US$2 million for various medical staffing and supplies, including test kits, nurses, masks, gloves, and hand sanitizer. Additional charges totaling around US$11 million were allocated to staging employees for operations, encompassing coordinators, security personnel, medical support, and catering specific to operations.

Notably, Exxon also registered charges of around US$210,000 for facility management expenses, encompassing janitorial services, tent rentals, electrical and generator repairs, and various sanitization supplies. Moreover, approximately US$1.3 million was assigned to employee or affiliate costs related to standby, quarantine, and staging. Importantly, the audit process did not scrutinize every single bill within the US$7.3 billion expenditure. Auditors only reviewed a sample of the bills. The local and international team of experts was given a four-month deadline to complete the audit.

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• Bharrat Jagdeo, COVID-19, Government, pandemic, programme, Vice President

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