Oil disclosures - pulling teeth

Oil disclosures – pulling teeth

Aug 18, 2024 Editorial

Kaieteur News – Guyanese know less than they should about their oil wealth. The PPPC Government has been comfortable operating like Ebenezer Scrooge with sharing some of the essentials of their wealth with citizens. Trying to extract some information from local oil czar Jagdeo about the national patrimony has become torture. He is Scrooge-like, meaning very stingy when oil disclosures are involved, which should be a matter of routine.

The nation has been given the run-around with the rate that ExxonMobil was receiving for the billions of its equity that it invested here. First, it was money that was difficult to come by for fossil fuel companies, given the bad name that it has earned for its contributions to climate change. For a time, Guyanese thought that ExxonMobil was borrowing billions to fund its local offshore operations, only for little details here and there to seep into the public domain. From Jagdeo: ExxonMobil was entitled to a return on its investment. We agree that is what should be as it is the norm in businesses that are about profit making. But what is it and why does this have to be such a painful exercise for Guyanese? The old story from Jagdeo is that there is zero interest charged by ExxonMobil. Frankly, we have our doubts about the zero interest rate scenario, i.e., unless ExxonMobil is collecting interest under a different accounting label or is lumping it with some other practice to disguise its true nature. It is, because this is what Jagdeo shared last week when he said that ExxonMobil is ‘making a massive return on its equity investment here.’

Oil reserves have grown to another bone of contention with a hodgepodge of what could only be termed as slick, and less than straight from both ExxonMobil and the Government of Guyana. It couldn’t be shared with Guyanese because it was not a prime focus, but will be available in due time, which could be years. Then S&P Global, as reputable as they come in the world of business analysis, said that the reserves have increased from the longstanding 11B barrels to 18.7B. When the question about the true reserves was put before Jagdeo he underwent a change of heart.

The new oil reserves will be publicized within a week. It is now weeks later and Jagdeo has changed his tune again. When asked again last week about what the total number of barrels of oil is that ExxonMobil announced through eight new discoveries, Jagdeo resorted to his old ways: there is no change to the reserves. Guyanese heard this before through ‘substantial but not significant.’ These are the scratchy sounds that have come from Jagdeo in his weekly battles to dodge this question about total reserves. Other than for CNOOC, a member of the ExxonMobil-led consortium including 746,000 new barrels of oil from one of the announced discoveries in its annual report, and that S&P Global 18.7B total, there has been near total silence. There were eight new discoveries announced by ExxonMobil but no change to the reserves. Why go to the trouble then to say anything about new discoveries, even one? If negligible barrels of new oil were discovered, why rush before the world and call that a “discovery” here and later in seven other drilling sites? It is obvious that some stretching of the facts is at work, how much will come to light at some time.

Still another area of concealment concerns ExxonMobil’s production cost per barrel of oil in Guyana. Figures have ranged from as low as US$9 per barrel from Hess Corporation’s CEO, John Hess, to as high as US$40 from Bloomberg, the most recognized business media powerhouse in the world. Meanwhile, ExxonMobil, the repository of Guyana oil secrets, has been sparing relative to the issue of what its breakeven point is for a barrel of oil produced here. Guyana is in a partnership with ExxonMobil, yet Guyanese grope for meaningful oil information but mostly come up empty handed. We think that the company is delivering that breakeven detail to the government. It is a disclosure, another one that should be shared with Guyanese, but is not. Instead of disclosures with their oil patrimony, Guyanese live with oil darkness.

Editorial, ExxonMobil, Government, PPPC, routine

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Oil disclosures – pulling teeth

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Oil disclosures – pulling teeth

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