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ExxonMobil’s interest rate on investments still a mystery
Five years later…
– but Pres. Ali says Govt. managing oil sector in transparent manner
Kaieteur News – With Guyana soon approaching its fifth anniversary since the commencement of oil production activities, the country is still in the dark on the interest rates being charged by the operator of the Stabroek Block, ExxonMobil Guyana Limited (EMGL).
President Irfaan Ali
ExxonMobil and its partners, Hess and CNOOC each make annual equity contributions to support the Stabroek Block operations. Consequently, the companies each receive an interest on the financial investments. This rate of return, though previously justified by Vice President Bharrat Jagdeo remains a mystery, although this country’s resources are being used to pay those companies.
Be that as it may, President Irfaan Ali believes there is no lack of transparency in the management of the burgeoning petroleum sector. During a press conference on Thursday, the Head of State was asked to comment on his government’s perceived lack of transparency in the management of the sector. Ali in response explained, “I can’t respond to perception, what facts are you bringing? If you are saying, there is lack of transparency where is the lack of transparency?” Notably, the Head of State did not allow Kaieteur News to cite specific examples but he noted that he does not need to address matters relating to the sector since the VP answers questions weekly in that regard.
The President then went on to explain, “In terms of the management of the sector, we had made it very clear there are historical things that we would have liked to be better, we would have liked the negotiations then to give us a better agreement but we have an agreement that we have to work with.”
After Ali pointed to the enactment of a new Petroleum Activities Act to govern the sector, the passage of the Local Content legislation, as well as the new Production Sharing Agreement (PSA) crafted by his government, Kaieteur News alerted the Head of State that the country is still in the dark on the interest rates being charged while there has also been no update to the Stabroek Block reserves in two years. The President however maintained, “I don’t know that there’s a lack of transparency. I can’t agree with you and I can say to you that all the revenue we have received is published according to law and there is remedy in the legislation if those revenues are not published.”
Meanwhile, the Head of State noted that work was ongoing to update the country’s reserves and when information in that regard becomes available, it will be shared publicly. He said, “Now in terms of the finds and the commercial viability, that is ongoing work and as the information becomes available, whatever information is there that becomes available will be shared publicly. You can rest assure we have no interest in not revealing the reserves that we have because we want more persons to be attracted.”
While the President has committed to revealing the updated reserves, as this would be in the best interest of the country, the government has refused to provide the public with recent data in that regard although Exxon has publicly revealed that appraisal activities are ongoing to determine the viability of the resources that have been discovered to date.
The last resource estimate in 2022 of the Stabroek Block determined that the country had approximately 11 billion barrels of recoverable oil reserves. Since then, however, Exxon has announced an additional eight discoveries. Stakeholders believe that the government is deliberately withholding the updated oil reserves from the public as this would lead to more public pressure for a renegotiation of the 2016 oil deal with Exxon.
It must be noted that President Ali did not address the unknown interest rates being charged by ExxonMobil and partners in the Stabroek Block.
Previously, VP Jagdeo said Guyana was paying a rate to Exxon as this is a standard practice for a return to be generated on a company’s equity. “Regardless of whether you make the financing in the form of a loan or equity, you have to get a rate return. There is a cost of capital and that is how it is,” Jagdeo asserted. Despite multiple attempts by this newspaper to clear the air on this issue however, the government has refused to tell the nation how much interest was being charged on the companies’ investments.
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