Opposition urges Govt. to go after ExxonM for oil money illegally spent in Canje, Kaieteur blocks

Aug 05, 2024 News

---

…says Jagdeo, PPP/C have no interest in recovering oil funds

Kaieteur News – The People’s National Congress Reform (PNC/R) is of the view that the Government of Guyana and Vice President, Bharrat Jagdeo have no interest in recovering the oil funds Exxon used from the Stabroek Block to offset expenses in Kaieteur and Canje.

Economist and advisor on the oil sector to the party, Elson Low told this publication in an invited comment on Saturday evening that his party has been urging the government to engage the operator (Exxon) and make it clear that the monies spent in other blocks should not be charged to Stabroek.  “We have previously urged the government to urgently engage the Operator to make it clear that expenses which carry across blocks should not be included in the Stabroek Block cost recovery bank as this is a wide-ranging issue. Drill ships used for the Kaieteur and Canje Oil blocks are just another example of this problem,” he said.

The PNC is of the belief that had Exxon been engaged in a timely manner, the dispute would have already been resolved and the funds recovered or the costs removed altogether. Low stressed that the opposition “can only conclude that the PPP has no interest in recovering these costs. This has been their attitude towards cost oil audits from the inception, and the chaos that came from the disputed $214m USD, which the country has still not recovered funds from, is an example of their attitude.”

Furthermore, “We believe through proactive action on issues of legitimate confusion, we can avoid escalating disputes. Where disagreement remains, however, robust audits that are enforced is vital to ensure Guyanese get the money they deserve.” Late last year, an audit report—drafted 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 as well as Canje.

Audit findings

Kaieteur News had 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. In the first instance, the report states that Exxon used the Stabroek Block revenues to cover a permit fee for a Kaieteur Geotechnical and Geophysical Survey. When auditors made this discovery and roasted Exxon for such a flagrant violation of international best practices, Exxon agreed that it should not have occurred.

As a result, auditors asked that the US$16,039 used to cover that survey be returned to the Stabroek Block cost bank. Auditors said this was done in October 2022. In the second instance, auditors found that Exxon included its cost recovery statement for the Stabroek Block, 100% of the costs associated with an Emergency Response Study for oil spills from Guyana wells. Auditors said the Stabroek Block revenues should not have been used to cover 100 percent of this activity since the study looked at wells in the Kaieteur and Canje blocks. Auditors said Stabroek’s share should have been 50% of the cost or US$ 32,575 while Canje’s share should have been 25% or US$16,287.64 and Kaieteur’s share 25% or US$16,287. Exxon was therefore asked to return US$ 32,575 to the Stabroek Block’s account.

In the third case, auditors said Exxon charged the Stabroek Block’s producing projects, 100 percent of the cost for various vehicles. The auditors contended that since the vehicles are also used to support activities related to the Kaieteur and Canje blocks, Exxon must return US$404,285 to the Stabroek Block account. In the fourth case, the auditors said Exxon charged the account of producing Stabroek Block projects, 100 percent of the renovation costs for Exxon’s Duke Street office, including upgrades, furniture, and setup costs. Auditors reasoned that Exxon operates all of its Guyana operations out of the Duke Street office, so charging 100% of the more than US$6 million of renovation costs entirely to the Stabroek Block’s account “is patently inequitable.”

In the fifth case, auditors found that Exxon charged the account of producing Stabroek Block projects 100% of the costs from Environmental Resources Management, ERM Guyana, and RPS Group for various studies on the impact of oil and gas operations on fish, bird, and turtle migrations, habitats, and survival. Auditors urged Exxon to return US$1,391,902 to the Stabroek Block account.

Meanwhile, the second audit report on ExxonMobil Guyana Limited’s expenses totalling US$7.3B has exposed how the company brazenly used Stabroek Block profits to pay for drill ship expenses related to two separate and distinct blocks—Kaieteur and Canje. In this case, the auditing team found that Exxon had four drill ships from Noble Corporation working during early 2020. However, the COVID-19 pandemic made staffing all four vessels challenging. Auditors were informed that Exxon took the decision to suspend the services of the Stena Carron drillship and the Noble Tom Madden and move them closer to shore into a “hot standby” (idle but still operational) mode until the staffing issues could be alleviated.

In the case of the Stena Carron, auditors said records show Exxon had Stena on standby to execute works for Stabroek as well as Canje and Kaieteur which it walked away from this year.

Records show that Exxon had the Stena Carron drill ship drill the Tanager-1 well in the Kaieteur Block beginning September 9, 2020 and ending November 23, 2020. Stena was then moved to the adjacent Canje Block where it worked on the Bulletwood-1 well which began December 31, 2020 and ended March 2, 2021. Stena was also used to drill the second well in Canje called Jabillo-1 which began on March 12, 2021 and ended March 20, 2021.

Vice President (VP) Bharrat Jagdeo at one of his press conferences last October though maintaining that the company had committed illegalities by using Stabroek’s oil funds to pay for works in other blocks, had said that they will face no punishment for it. Addressing the media at his October 26, 2023 press conference, the VP said that the oil company will face consequences. When he was asked by this publication to expound on the issue, he stated that according to the contract signed with Guyana, the expenses would not be included in the cost bank for the Stabroek Block.

“I maintain my position that it would be illegal and I repeat that. The audits would have revealed that now and as I said before, there will be consequences. If you did unauthorized work, you don’t go to jail according to PSA it just doesn’t form part of the cost bank,” the VP said.

Fast forward to August 2024, the VP was asked by this publication to give an update on the progress so far by the government to recover the monies Exxon misused, but was met with blunt refusal by the VP to answer on the matter. Last Wednesday, he was asked by Kaieteur News to say if there were “Any developments to recover the money the auditors discovered Exxon spent in the Kaieteur and Canje oil blocks?”  Jagdeo responded: “So the last time you said that the minister doesn’t want to answer some of your questions. So he will have a press conference and all of these routine things, that are not policy-based, you can find out there.”

He instead directed Kaieteur News to the oil minister who rarely responds and also dodges questions on key aspects of the sector.

---

• drill ships, Jagdeo, monies, no interest, Recovered, Stabroek Block

---