By Kemol King
ExxonMobil and all other oil companies with which Guyana is doing business, will face no penalties if they are found to overstate the costs that they intend to recover from operations done offshore Guyana. This is according to Director of the Department of Energy, Dr. Mark Bynoe.
The Director was asked what Government would do if ExxonMobil overstates any of the costs included in the $10B it intends to recover for developmental works on the Stabroek Block’s Liza-1 and Liza-2 projects.
To Kaieteur News, Dr. Bynoe responded that the Department would simply refuse to pay overstatements, and that that would be the only action taken by Government to correct any misstatements.
In other words, there is no mechanism in place to deter these companies from attempting to rob the Guyanese people.
Kaieteur News had posed the question to Minister of Finance, Winston Jordan, and to Commissioner-General of the Guyana Revenue Authority (GRA), Godfrey Statia. Both had declined to comment.
UK FIRM to AUDIT COSTS
The Department of Energy has already recruited a London-based firm to audit the billions of dollars being claimed. The firm is IHS Markit Limited.
In its Expression of Interest (EOI), the London-based firm stated that it has the deepest source of information, analytics and solutions for the major industries such as oil, while noting that it has provided its expertise to clients in over 165 countries for more than 50 years. The company further stated that it understands the holistic impact of costs on upstream operations.
In terms of what it is bringing to the table for Guyana, IHS said that it has a comprehensive global database of exploration and production costs. It said that this data includes local and regional costs at the component level so as to allow for detailed comparisons.
Kaieteur News understands that the firm will be working along closely with the officials of the Guyana Revenue Authority (GRA) on these and other related audits.
The costs that Exxon’s subsidiary, Esso Exploration and Production Guyana Limited (EEPGL) and its partners, Hess Corporation and CNOOC Nexen, are claiming are monumental.
US$960M PRE-CONTRACT COSTS
Pre-contract costs, as stated in the Production Sharing Agreement (PSA) they signed with Government, concern works done between the first contract’s signage in 1999 and its revision in 2016.
The first US$460M of costs are overstated by “at least” US$92M, Attorney-at-Law and Accountant Christopher Ram had found. His calculation had found that all figures supplied by the companies, even when one allows for all expenses and expenditures, amount to a far cry from the US$460,237,918 that Exxon and its partners are claiming.
He also came to the conclusion that the costs cannot be refused. He had told this publication that the costs were approved when the contract was signed.
International Lawyer, Melinda Janki, was one of the first persons to note that the country is neck-deep in pre-contract costs.
During a panel discussion that was held on Guyana’s oil contract with ExxonMobil at Moray House, Janki had reminded that in addition to the US$460M, there is a second lot of costs, for operations between January 2016 to when the deal was signed on October 7, 2016.
The international lawyer had said, “The costs for the whole of 2016 were about US$583M and if you apportion it to October, you get roughly US$400M. Again, Minister of Natural Resources, Raphael Trotman has agreed for Guyana to pay this. As at October 7, 2016, Government’s attempt to sell our oil costs us US$960M.”
US$10B DEVELOPMENT COSTS FOR LIZA-1, LIZA-2
ExxonMobil and its partners are looking to collect about US$10B from Guyana in the course of two years, in order to pay off for the Liza 1 and 2 field Developments. These costs include those of the two Floating, Production, Storage and Offloading vessels, the Liza Destiny and Liza Unity.
Chief Executive Officer (CEO) John Hess confirmed this during a recently Energy Conference in Florida.
The costs include US$3.7B for the Liza-1 project, and US$6B for the Liza-2 project.
Jan 25, 2020Attorney for several Cricket Stakeholders, Attorney-At-Law Arudranauth M. Gossai of the Law Firm Gossai & Gossai of Lot 8 St. Ann Street, New Amsterdam, Berbice, has written to President of...
Jan 25, 2020
Jan 25, 2020
Jan 25, 2020
Jan 25, 2020
Jan 25, 2020
Nigel Hinds published a letter on me in yesterday’s Kaieteur News that is almost a page. There are fictions and omissions.... more
Once the ballots have been counted at the places of poll, the ballot boxes really do not matter much anymore. The concern... more
Editor’s Note, If your sent letter was not published and you felt its contents were valid and devoid of libel or personal attacks, please contact us by phone or email.
Feel free to send us your comments and/or criticisms.
Contact: 624-6456; 225-8452; 225-8458; 225-8463; 225-8465; 225-8473 or 225-8491.
Or by Email: [email protected] / [email protected]