Govt. willing to spend big bucks to recover money Exxon illegally took out from Guyana’s oil profits

Aug 26, 2024 News

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Kaieteur News – The Government of Guyana has committed to recover monies ExxonMobil illegally took out from Guyana’s oil profits, no matter the cost attached to the proceedings.

Minister of Natural Resources, Vickram Bharrat recently disclosed that the government has since written the oil company about the US$214M that was used for activities not related to production and exploration in the Stabroek Block offshore Guyana.

The use of the money was revealed in final report for the first audit of Exxon’s expenses dated 1999-2019. ExxonMobil has a 60-day period to respond to inquiries from the government but have not yet done so.

Should Exxon fail to respond and no mutual agreement is reached, the government and the oil company shall proceed to arbitration. According to the provisions in the Production Sharing Agreement (PSA) signed between the parties, the oil company’s litigation costs must be paid by Guyana. Guyana’s obligation remains irrespective of whether it could prove Exxon’s fault.

The 2016 PSA states that, “All costs and expenses of litigation and legal or related series necessary or expedient for the procuring, perfecting, retention and protection of the contract area and in defending or prosecuting lawsuits involving the contract area or any third-party claim arising out of the activities under the agreement or sums paid in respect to legal services necessary or expedient for the protection of the interest of the parties are recoverable. Where legal services are rendered in such matters by salaried or regularly retained lawyers of the contractor or an affiliated company of the parties’ comprising contractor, such compensation will be included instead under sub-section 3, 1 (B) or 3.1(D) above as applicable.”

In light of the aforementioned, Minister Bharrat was asked if the government considered the cost that will accrue should the parties go to arbitration.

“The question with arbitration and cost, we are not there, we are not there. I don’t want to assume or to procrastinate, we are hoping that this matter can be resolved amicably between the two parties and that we don’t reach the stage or arbitration,” the minister said.

He continued: “If we have to go to the stage of arbitration, we will have to because it is $214M USD we are talking about and if it will cost us one tenth of that, it makes perfect sense because it is for $214M to be written off from the cost bank. So I am just saying if we gotta spend ten or five or three or two million, I don’t know what’s the cost none of us know as yet but I am just saying it makes sense because you are saving $214M USD, so if it gets to that stage we will have to offset the cost.”

The Government of Guyana (GoG) has made it clear that it will not be engaging in any settlement with ExxonMobil over the US$214million in questionable costs flagged by British auditor, IHS-Markit.

Last October, Vice President Bharrat Jagdeo was asked by this newspaper whether government has considered settling the dispute with the oil giant given how tedious the process has been and the fact that Guyana will be required to cover the costs of Exxon’s legal defence.

To this end, Jagdeo informed that the GoG has been guided by two sets of advisors on the matter that have both recommended that the US$214M sum be returned to the cost bank. This means that the US$214M will be split as profits, which will allow Guyana to receive US$107M while Exxon will enjoy the other US$107M.

Consequently, Jagdeo asserted, “I don’t believe there is scope at this stage for settlement especially given the magnitude of reduction.” He explained, “Exxon is talking about moving from US$214M to US$3M and if we settle with that, then it’s only half of that we get and so those figures are not palatable at all.”

As such, the former Head-of-State noted, “We may have to go to arbitration.”

Meanwhile, he told reporters that government has not done an assessment of what the arbitration process would cost. He however pointed out that he believes this is the fittest method.

“Given all that has happened, I think you need an independent third party on this. If you settle on any figure, say US$214M with Exxon people will say oh you caved to Exxon, if you settle at US$3M, it is worse so a third party is needed to deal with all of these issues. We should not engage, I think, in any negotiations,” the VP said.

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• big bucks, Exxon, Government, offset, oil profits

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