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Exxon sides with Jagdeo that Guyana is not an investor in Stabroek block operations
…says Guyana is a partner, didn’t put up any funds as investments
Kaieteur News- ExxonMobil Guyana Limited (EMGL) has recovered over US$33B in costs to date, more than the value of the three projects producing oil currently, which carry a collective price tag of about US$19B.
President, EMGL, Alistair Routledge
With more than US$14B therefore channeled towards the development of the additional projects approved in the Stabroek Block, stakeholders have constantly argued that such a scenario has made Guyana virtually an investor in the operations. When questioned on this state of affairs, President of EMGL, Alistair Routledge denied that the country was advancing money towards the developments.
He said, “We view, not just the government but the country as a partner in the development of the resource, so I mean the question of investment, the country never advances funds to invest in the development of the offshore resource, it’s always the investors that do so.”
Consequently, Routledge explained, “So I think choosing a word, what’s important to understand is, does the government ever put money on the table at risk or operating cost for any our projects? It’s always the investors that do that. As such, the government and the country do not take that financial risk in the development of the resources offshore.”
In the absence of a ring-fencing provision, ExxonMobil uses the revenue from one project to develop other projects in the Stabroek Block. Had this mechanism been implemented, the company would have been mandated to use the oil produced at one project to pay off the costs associated with developing the resource. It would also enable the country to receive 50% of the oil produced as profits, following the recovery of costs.
Attorney-at-Law and Chartered Accountant, Christopher Ram in an interview with Kaieteur News had addressed this issue, pointing out that investments are made in various forms. He was at the time responding to comments made by Vice President, Bharrat Jagdeo, who rejected his claim that the country is a de facto investor in petroleum operations. Jagdeo said he has not seen any borrowing by the government injected into the petroleum sector hence Guyana cannot be considered an investor.
According to Ram, Jagdeo knows as well as anyone that borrowings are only one form of financing of investment. Ram said, “As any company finance executive, or any review of financial statements of Banks DIH or DDL would elucidate for him, there are two other principal methods – raising money from shareholders via equity or preference shares, or retained earnings of the company.”
Ram also claimed that the Vice President must be aware that Exxon has been permitted to use and claim as cost recoverable expenses, expenditure on its new head office building at Ogle. He said too that Jagdeo is also aware that Exxon’s participation in the gas to shore project will utilise revenues from petroleum that would otherwise be available as profit oil of which the government would have been entitled to 50%. “It is a logical corollary that by virtue of being a 50% participant in profit oil from the Stabroek block, Guyana is bearing 50% of all cost, contractually or otherwise deemed recoverable,” the Chartered Accountant said.
(Exxon sides with Jagdeo that Guyana is not an investor in Stabroek block operations)
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