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ExxonMobil already deducting costs for gas pipeline
…although Govt. says it paying back through purchase of gas
Kaieteur News – The Government of Guyana (GoG) has maintained that it will not be paying for the natural gas in the Stabroek Block but will receive the gas for free to provide cheaper electricity to a portion of the country.
According to the administration, it will be paying ExxonMobil for the gas to repay the costs of the 12-inch pipeline being constructed to transport the gas. This means that the company should be compensated when gas is delivered to the government. Although the pipeline is yet to be completed however, the oil giant has begun reimbursing itself for the US$1B project cost by deducting Guyana’s oil.
This is according to the 2018-2020 audit report, conducted by VHE Consulting, of the company’s expenses. The report that was recently made public by the government shows that ExxonMobil claimed it spent some US$2.1M on the project during the period under review. “The Contractor included on the Cost Recovery Statement costs for ground and air surveys, mooring studies, and Contractor and Affiliate labour for the proposed gas-to-power pipeline and onshore NGL plant,” the auditors explained.
The audit team highlighted that while costs for the gas-to-energy pipeline project are recoverable, those for the NGL plant are not. “Costs for the gas-to-power pipeline are recoverable under the Petroleum Agreement because the pipeline will transport gas to the “Delivery Point.” Costs associated with the NGL plant, however, are not recoverable because the plant will be located past the Delivery Point,” the report states.
Notably, the auditors did not contest costs submitted by the operator for the pipeline (see table attached for full details of costs claimed by Exxon for the project).
The audit report contradicts statements made by Vice President Bharrat Jagdeo, that the country will repay ExxonMobil for the project through the purchase of gas.
Jagdeo during a press conference in June 2022 said that, “Well the pipeline will be funded from cost oil, and we would have to repay that over 20 years. But the gas is free, and this is crucial; it is one of the things we were arguing for from the beginning.”
The GoG is yet to make agreements for the GTE project public, despite repeated calls from the Opposition and other stakeholders. In the absence of these key documents, the project details remain sketchy with no clear outline on the cost recovery aspect of the initiative.
VP Jagdeo was asked about the release of the agreements for the project during a press conference in April when he said, “Maybe soon.”
The Chief Policymaker for the oil and gas sector noted that the details of the agreement are already public knowledge. According to him, “Everything that you see in the agreement you know…we told you the price- US$750 million; we told you the timeline for implementation; you know how many turbines and what’s the size of the turbines…you know what the liquidating damages are.”
Jagdeo therefore said, “Maybe soon, I don’t know. I don’t know. That’s for Gail Teixeira and the others” when asked when the agreements would be laid in Parliament.
The Opposition has been calling on the government to table all agreements, relative to the massive US$2 billion GTE project, in Parliament however none of the documents have been presented to the nation. Since 2022, the government signed a Heads of Agreement (HOA) with the Stabroek Co-ventures, ExxonMobil, Hess and CNOOC, that outlines the principles and conditions for the commercial and technical arrangements of the deal.
Attempts made by Opposition Parliamentarians for the agreements to be laid in the National Assembly have been unsuccessful.
Expenses claimed by ExxonMobil between 2018 and 2020 for the Gas-to-Energy project
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