Latest update November 21st, 2024 1:00 AM
PNC mum on punishment for Exxon’s brazen use of Stabroek Block revenue
…says Gov’t. should sit with company and assert position
Kaieteur News – The illegal use of Stabroek Block revenues by oil major ExxonMobil, to cover costs in other offshore blocks should be addressed by government by sitting with the operator to outline its obligations.
Economic Advisor to the Opposition, Elson Low
This is the position of the People’s National Congress/ Reform (PNC/R). During a press engagement on Thursday, the party was asked by this publication whether it believes Exxon should face sanctions for the illegal use of Stabroek Block revenues to cover other expenses, as flagged by the recent US$7.3B audit report.
That audit, conducted by a local consortium Ramdihal & Haynes Inc., Eclisar Financial, and Vitality Accounting & Consultancy Inc. and bolstered by the international support of SGS and Martindale Consultants—gave a meticulous breakdown of five instances where the Stabroek Block’s financial resources were used for Kaieteur –a block Exxon walked away from this year –as well as Canje.
Vice President, Bharrat Jagdeo had acknowledged that while this was an illegal act, Exxon will only face “consequences” which will deem the costs unrecoverable. This means that the costs will not be allowed.
Kaieteur News reported that as a result of the five instances in which the oil companies acted in violation of the contract, auditors insisted that the Stabroek Block account be reimbursed with US$3,812,653.
On Thursday, Economic Advisor to the Opposition Leader and spokesperson on oil and gas matters, Elson Low said that the government’s failure to address the situation can allow for future reoccurrences.
“Some of these disputes are concerning and we need to see government urgently meet with the operator to clarify some of these issues and to ensure that they do not reoccur. First of all with concerns with monies being spent on activities which should not be recovered needs to be made clear to the operator that this is not acceptable,” Low explained.
Meanwhile, Low indicated that there are other areas which the government must “clear up with the operator” concerning the use of revenue from the Stabroek Block to fund developments in other blocks.
The Economic Advisor to the Opposition Leader noted that since such brazen acts are likely to continue, “the government needs to speak to the operator as soon as possible.”
He added, “That is where we start…we believe that the government must meet with the operator, must make these things clear…what we need to see is the government meet with the operator and outline Guyana’s position that only expenses related to the Stabroek Block should be charged to the Stabroek Block.”
Low noted that after engaging the operator, if future audits continue to flag such illegalities “then there would be need for additional actions and additional conversation.” He did not cite what specific actions should be taken against the operator.
This newspaper, however, asked the party representative whether he believes outlining Guyana’s position to the operator would be sufficient since the multinational company should have a clear understanding of its responsibilities by now.
To this end, Low told Kaieteur News, “We need to differentiate between costs that are wholly inappropriate, such as a puppet show, are made clear to the operator (that) we don’t expect to see that happening again and where there is dispute over whether or not costs are legitimate that there is no dispute as to whether or not costs are legitimate.”
According to him, “There is a difference between a puppet show or yoga activities which are a one-off…and them charging us more than they really should, in our opinion for activities across multiple blocks. That is an issue which will be a problem in every single audit that is conducted. To that end, we must engage the operator to clarify that and if there is a disagreement out of that, then we can look at further action on how we will approach it but we first of all need to engage the operator before we can look at any kind of sanction because we need to get their perspective and we need to make it clear what our perspective is.”
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