Latest update March 28th, 2024 12:59 AM
Nov 25, 2018 News
After examining the 2017 financial statements of ExxonMobil’s partners (Esso and CNOOC/NEXEN and Hess), Chartered Accountant, Christopher Ram, has found that the three-party set up will spend well over $500B up to December 2019. But if the operator is to recover this money, it will take over 240M barrels of oil, taking into account that US$10 (approximately $2,100) is applied to every barrel of oil.
In this recent writings, Ram reminded that he had challenged the veracity of ExxonMobil’s pre-2016 pre-contract cost of US$460 million or approximately $92 billion, which Esso and its two partners had reported to have spent at December 2015.
Ram stated that the audited figures of the three companies up to December 2017 showed a total expenditure of $354 billion. Consistent with international accounting standards, referred to as IFRS, Ram said that Esso has set out its capital commitments for the years 2018, 2019, 2020 and thereafter. He stressed that the financial statements of Esso’s partners, CNOOC/Nexen and Hess, did not include such detailed disclosures.
The Chartered Accountant stated, “The financial statements for Hess which are stated in United States Dollars – and not in Guyana Dollars as required by law -disclose no commitments, while in the case of CNOOC, the disclosures relate only to commitments after two years.
“Financial statements however, are not required to disclose all projected costs – only those for which the entity has contracted – and therefore actual expenditure could be substantially higher.”
He added, “I have therefore done some extrapolation to estimate the total pre-production costs of the three companies to the end of 2019, the year before commencement of oil production by assuming that the same level of expenditure as a percentage of the expenditure to date incurred by Esso will be incurred by the other partners.”
“Recoverable cost of $354.2B at the end of 2017 was derived from the actual expenditure to date as disclosed in the partnering companies’ financial statements. This increases to $504.4 billion at the end of 2019 based on our (limited) estimates.”
Ram said that these figures show that total pre-production costs will not be recovered in the first three years of the project. Therefore, Guyana will likely only receive the guaranteed minimum profit oil and royalties of 14.25% of sales.
Of this amount, he said that the Government will probably spend 1.425% in selling and other costs, leaving the country with 12.825% of sales.
“And it does not escape us that out of the Government’s take, it has to pay the taxes of the oil companies. Of course, all this means is that there is no reduction but merely a redistribution of the total take into Oil Revenue and Corporation Tax.
That is the nature of the contract signed with the Oil Companies,” the Chartered Accountant expressed.
THIS IDIOT TELLING GUYANA WE HAVE NO SAY IN THE 50% PROFIT SHARING AGREEMENT WE HAVE WITH EXXON.
Mar 28, 2024
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