Guyana already funding pipeline through cost recovery

Apr 12, 2026 News

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…country to buy 375 billion cubic feet of Gas from Exxon for 20 years – secret contract reveals 

By Davina Bagot 

(Kaieteur News) – After relentlessly ridiculing the former Coalition government for hiding the country’s Production Sharing Agreement (PSA) with ExxonMobil, the PPP government has done no different when it comes to the contracts signed for the controversial Wales Gas-to-Energy (GTE) project, the country’s single most expensive infrastructure development on record.

Although the pipeline and two gas plants alone are likely to cost this nation about US$2B- more than this country’s total national debt in 2018 which was just around US$1.8B- the government continues to treat the project as a personal scheme, with questions ignored, contracts concealed and costs buried.

The closely guarded contracts however spell more financial calamity for Guyana, perhaps the only justification for keeping the documents under lock and key.

Sources close to the ongoing Wales project have revealed damning elements of the contract between ExxonMobil and the Government of Guyana (GoG), which contradict the assurances given by both the contractor and government over the years.

Untruths about the project? 

Fed with information that can only be corroborated with the hidden agreements, government and Exxon continue to spread details about the project which multiple sources close to government indicate are far from the fact.

Former GTE Task Force Head turned Consultant to the Ministry of Natural Resources, Winston Brassington, Vice President Bharrat Jagdeo and ExxonMobil Country Manager, Alistair Routledge all shared different perspectives on the project and its financing.

While Exxon claimed that repayment for the pipeline will not commence until the project comes online, sources said that the associated expenditure is already being deducted through cost recovery. Guyana has also signed a take-or-pay agreement with the company to purchase gas from Exxon. Simply put, this arrangement means whether Guyana ever uses the gas or Lindsayca ever finishes Gas to Energy, ExxonMobil’s investment is secured. The contract did not specify the cost that Guyana will pay for the resources.

Citizens were told that the gas in the Stabroek Block will be free, however the secret lies in the inception of the Heads of Agreement between former ExxonMobil VP Jesus Bronchalo, now consultant for the Government as CEO and Owner of Fulcrum LNG, and government’s consultant, Winston Brassington.

Sources said, “Initially the government wanted a Gas Supply Agreement, given the political statements of “gas being free” which are untrue. Gas production falls under the PSA, and producing Gas impacts the recovery of Oil of the co-venturers, so ultimately they arrived at a Gas Sales Agreement (GSA).”

Sources were clear that the agreement between GoG and Exxon is a commercial gas contract, and not a repayment of an investment. As part of the contract, Guyana has agreed to purchase the gas in the Stabroek Block from Exxon, a move which stakeholders question since the resources in the Stabroek Block should be the nation’s property.

In 2023, Brassington told the world at Guyana’s International Energy Conference that the GoG will be paying Exxon US$55 million annually for 20 years to clear the costs associated with constructing a 12- inch pipeline that will be used to transport natural gas from the Liza Fields offshore to the Wales development site.

On the other hand, VP Jagdeo presented a different plan to repay the contractor. During a press conference in June 2022 he told reporters, “Well the pipeline will be funded from cost oil, and we would have to repay that over 20 years. But the gas is free, and this is crucial; it is one of the things we were arguing for from the beginning.”

Meanwhile, Exxon’s Country Manager explained that the GoG will purchase the gas to repay the company for its investment.

“The gas that will come on shore, in essence, that development is just gonna pay for the pipeline cost. Nothing more…the gas itself, we are selling the full 50 million cubic feet a day to the government or a government entity that is being established in order to receive the gas and put it through the power station,” Routledge explained.

Sources however indicated that this is the true take-or-pay, in which ExxonMobil is guaranteed that the GoG will pay for the gas volumes, regardless of utilization and risk-free as cost-oil becomes its recovery mechanism. It is unclear whether the gas payment agreement commenced upon completion of the pipeline or will take effect after commissioning of the NGL and power plant at Wales.

A Look at SEC Filings of Hess and ExxonMobil

A review of ExxonMobil’s (and its partner Hess’s) official SEC filings and regional investor reports (such as the ExxonMobil Guyana Annual Reports for 2023 and 2024), the highly specific terms of a “US$55 million annual repayment” are not present.

Here is exactly what is disclosed in the official filings and how the repayment is actually structured from the corporate accounting perspective:

1. The investment is confirmed at $1 Billion

In the ExxonMobil Guyana Limited Annual Report, the company explicitly confirms the capital expenditure:

1. “ExxonMobil Guyana, Hess and CNOOC planned investment is approximately US$1 Billion to construct the 130-mile pipeline network that will transport ~50 million standard cubic feet of natural gas daily to the onshore processing facility.”
2. Repayment is via “Cost Oil”, Not Cash

The Hess SEC filings and regional annual reports clarify that Hess and ExxonMobil SEC filings are not carrying this investment as a cash loan or receivable from the Guyanese government. Instead, the pipeline’s construction costs are capitalized and recovered through the Stabroek Block Production Sharing Agreement (PSA).

1. The Mechanism: The investor reports outline that ExxonMobil recoups its capital investments through “Cost Oil.” Under the PSA, the consortium is allowed to allocate up to 75% of the total oil produced and sold from the Stabroek block to recover their development costs (including the Gas-to-Energy pipeline).
2. Corporate Accounting Reality: From ExxonMobil’s perspective (and under U.S. GAAP reporting to the SEC), the pipeline is treated as upstream infrastructure. They recover their $1 billion investment by lifting and selling oil, not by collecting a fixed yearly cheque from Georgetown.
3. Why the $55 Million Figure Isn’t in the SEC Filings

“Because ExxonMobil recovers the pipeline costs in barrels of oil rather than a fixed cash annuity, you won’t find a 20-year amortization schedule for $55 million in their consolidated U.S. financial statements,” sources explained.

Instead, “The $55 million figure is actually a Guyanese government budgeting calculation. To explain to the public how the pipeline impacts national revenues, the government mathematically modeled the $1 billion pipeline deduction over 20 years, equating it to a notional “unit cost” of $2.40 per MMBTU, which translates to a US$55 million annual reduction in Guyana’s share of profit oil,” an official noted.

The SEC filings confirm the US$1 billion investment and the 50 million cubic feet per day volume, but report the repayment simply as a standard cost-recovery deduction from offshore oil production, rather than a standalone financial loan. Hess in its SEC filings register a Sales Commitment of 375 billion cubic feet of gas to the GoG for 20 years.

Shifting responsibility- A political web designed to lock away the agreements

Since the end of 2022, the political opposition began requesting agreements signed between the GoG and Exxon be laid in the National Assembly. These requests were met with the simple explanation that the time was not right.

Former Opposition MP, David Patterson had asked whether any agreements were signed with Exxon in connection with the Wales project and if yes, for the subject Minister to supply the House with a copy of the said agreement.

During a Sitting of the National Assembly in December 2022, the Minister of Natural Resources, Vickram Bharrat in a written response admitted that GoG signed a Heads of Agreement (HOA) with the Stabroek Co-ventures on June 30, 2022. “This agreement sets out the principles and conditions for the commercial and technical arrangements of the Gas-to-Energy Project,” Bharrat said.

However, he explained, “There are other agreements on supply, buyer’s agreement, field development, licensing conditions, onshore works, and land matters that are currently being drafted. The respective agreements and policy documents will be presented to this Honourable House when they have been agreed upon and executed. All agreements are being done in a timely manner to meet the Final Investment Decision which will allow for the project to be completed by our committed deadline of December 2024.”

Although the commitment was made for the documents to be laid in Parliament, no official agreement with the GoG and the contractor, relating to the project was ever presented to the House. When Kaieteur News began requesting these documents, responsibility for the project shuffled between government officials, a ploy that continues today.

Faced with questions, VP Jagdeo said, “Maybe soon, I don’t know. I don’t know. That’s for Gail Teixeira and the others” when asked when the agreements would be laid in Parliament. Kaieteur News days later caught up with Minister of Parliamentary Affairs and Governance, Gail Teixeira who explained, “I am not aware that the documents are ready.”

When asked to comment, Natural Resources Minister said he was busy and the question could be sent to him. This newspaper was however recently informed by Bharrat that the Prime Minister’s office is now handling the project. When contacted, Prime Minister, Mark Philips advised Kaieteur News to contact the project consultant, Winston Brassington who continues to read and ignore queries sent by this publication. It was reported that PM Phillips for third time in November 2024 promised the National Assembly to lay over the agreement signed with Exxon and other related documents.

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• Cost Recovery, ExxonMobil, gas pipeline, GTE project, LINDSAYCA, Winston Brassington

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