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Norton says will back ring-fencing if US$19B cost for three projects has been recovered
…unaware over US$34B already recovered by Exxon
Kaieteur News- Over US$34B in cost has been recovered to date by ExxonMobil but the Leader of the Opposition, Aubrey Norton appeared unaware of this fact during his weekly press conference on Friday.
He was asked by this newspaper whether he supports the statements by the Alliance For Change (AFC) that the seventh oil project- Hammerhead- should not be approved without a ring-fencing provision.
The People’s National Congress Reform (PNCR) previously indicated that it would assess each project to determine whether ring-fencing would be appropriate.
Opposition Leader, Aubrey Norton
Norton explained on Friday, “We have generally said that we believe ring-fencing is a useful tool; that we will look at every specific case and ensure there is ring-fencing.”
He went on to admit that he has not yet reviewed the figures relating to cost recovery in the Stabroek Block, but should it be discovered that the cost invested in the three projects currently producing oil then it would throw its support behind ring-fencing.
It is public knowledge that the country’s first three oil projects, Liza One, Liza Two and Payara carry a collective price tag of about US$19B. Meanwhile, Vice President, Bharrat Jagdeo earlier this year informed Reuters that the ExxonMobil-led consortium has recovered a whopping US$33.9B as at the end of January 2025.
Be that as it may, the Opposition Leader confessed, “I have not looked at the figures, but when we do look at the figures, if we are satisfied that the cost has already been recovered from the initial investment, we will surely support ring-fencing but at this stage, I just don’t want to speak for the sake of speaking.”
This newspaper however pointed out that the application for the seventh project has been pending for weeks now and asked the Leader how much time he would need to review the numbers.
To this end, Norton reasoned, “The issue here is not how long it takes. To me when you are doing ring-fencing, it’s to protect your resources and to ensure that there is not the use of resources from one project on another project and it is for that we need clear data and will support ring-fencing once the money that was invested and there was the appropriate return under the investment, we will support ring-fencing in that circumstance.”
In a subsequent interview with this newspaper, the Leader confirmed that he was referring to the cost of the three projects currently producing oil.
He said, “At this stage it has to be the three in operation.” As such, Kaieteur News pointed out that Exxon has so far recovered more than the cost of those developments.
Norton therefore reasoned, “Well if that is the case, I don’t have the figures, but (if) I get those figures and I confirm that, I would believe ring-fencing would be appropriate.”
On Friday, this publication reported that the AFC called for government to ring-fence the seventh oil project.
“Regardless of oil price, because oil prices will go up and down…ring-fencing should be a requirement on the table to start the discussion with Exxon” former Executive Director of the Environmental Protection Agency (EPA), Dr. Vincent Adams told reporters at a recent media conference.
Ring-fencing
A ring-fencing provision would mandate that only costs associated with that development is recovered from the specific project when it starts producing oil. This would avoid the operator, ExxonMobil from adding other expenses to the cost bank which are not related to that project and ensure a higher share of revenue is available to be split with the country.
The Production Sharing Agreement (PSA) stipulates that 75% of oil produced monthly can be recovered by the operator to cover expenses. The remaining 25% is then shared equally between the Government of Guyana (GoG) and the oil company as profits, with the country receiving an additional 2% royalty.
Table showing the six projects approved to date that have been paid for by Guyana, according to the cost recovered so far.
|
Project
|
Cost (USD) |
Cost Recovered |
|
-Liza One
|
-$3.5B
|
ü |
|
-Liza Two
|
-$6B |
ü |
|
-Payara
|
-$9B |
ü |
|
-Yellowtail
|
-$10B |
ü |
|
-Uaru
|
$12.7B |
X |
|
-Whiptail
|
$12.7B |
X |
|
Total
|
$53.9B |
|
|
COST RECOVERED UP TO JANUARY 2025
|
US$34B |
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