‘Exxon not using Guyana’s oil for its operations’

Sep 06, 2024 News

– says provision in PSA is not for crude oil but natural gas

Kaieteur News – The Government of Guyana has insisted that operator of the lucrative Stabroek Block ExxonMobil is not using this country’s oil for its operations.

Vice President Bharrat Jagdeo

Questions have been raised as to whether ExxonMobil has been utilising this country’s crude as provided for in the lopsided Production Sharing Agreement to fuel its offshore operations. Vice President Bharrat Jagdeo on Thursday at his weekly press conference told the media while responding to a question posed by this newspaper that he had previously addressed the issue and it remains the same.

“I think it still stands that they are not using any of the production for that purpose, for generating power or power in the FPSO’s, they are not using any of the crude produced for that purpose. So it would be zero,” Jagdeo said.

The Ministry of Natural Resources also provided clarification on the issue in a statement responding to an article published by the Kaieteur News. The ministry said that, “Article 11.9 of the Petroleum Agreement states “The Contractor shall have the right to use in any Petroleum Operations as much of the production as may reasonably be required by it therefore and the quantities so used or lost shall be excluded from any calculations of Cost Oil and/or Cost Gas and Profit Oil and/or Profit Gas entitlement.”

The statement further clarified that this was in keeping with international best practices and transparency standards. Furthermore, the ministry said that it is common knowledge that the crude oil which is what Exxon extracts offshore Guyana has to be refined into a number of products as it cannot be used in its natural unrefined state. As there are currently no refinery operations in Guyana to refine the crude, it has to be exported to international markets where it can be refined into the petroleum products. “The ‘production’ for use in offshore operations, as referenced in the Agreement, is not crude oil but natural gas. Most of the natural gas extracted offshore is reinjected, while a portion is processed, removing impurities, so that it is useful as fuel,” the ministry added.

The issues of Exxon using oil from production for its operations was flagged by International Award-winning Lawyer, Melinda Janki during a webinar on Sunday. The virtual discussion titled ‘Guyana’s oil- boom or blowout?’ was widely attended by close to 100 participants from different countries. In her presentation, the Lawyer pointed out, “The Petroleum Agreement says that Exxon, Hess and CNOOC can take as much oil as they need for the operations. So, when they produce the oil, they can take, each one of them, Exxon, Hess and CNOOC, each one of them can take as much oil as they say they need for their operations.”

In 2021, Janki said she wrote to President Irfaan Ali requesting information on how much oil was being deducted by the companies; however, she never received a response.

She said, “Either he doesn’t know or he doesn’t want to say, but this oil does not get counted, it’s just gone and the rest of the oil is divided into cost oil and profit oil, so if you think of the oil, you have got three things- one, the free oil that’s taken off the top, we don’t know how much that is and it doesn’t count and then the rest of the oil which is divided into something called cost oil and profit oil.”

It should be noted that ExxonMobil Guyana Limited (EMGL), as the operator of the Stabroek Block is required to submit a quarterly production statement to the government of Guyana, outlining among other things the gross quantity of crude oil or natural gas produced as well as the “quantities used for the purpose of carrying on petroleum operations, including drilling and production operations and pumping to field storage.” Data on the Ministry of Natural Resources Petroleum Management Programme does not indicate how much oil is taken out by Exxon for its operations. The website however publishes information on the amount of oil produced daily by the company and provides an overview of gas injected, flared and used for fuel. This therefore raises questions about the publishing of selective information by the government.

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Exxon, Government, Guyana’s oil, oil, production

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