Jun 13, 2021 News
– “It is clear that the 2016 Petroleum Agreement governing the Stabroek Block was no sacred contract but an economic crime in which the PPP/C and the APNU+AFC Governments have played active roles.”—Chris Ram
CNOOC Petroleum Guyana Limited (formerly CNOOC/NEXEN) , the Chinese partner with a 25 percent stake in the Stabroek Block, raked in a whopping $9B in profits from the Liza Phase One operations in 2020. Revealing this was Chartered Accountant, Christopher Ram, in his column, “Every Man, Woman and Child in Guyana Must Become Oil-Minded (Part 88)” published on his website: www.chrisramnet.com
After an absence of nearly one year, Ram resumed his writing on the petroleum sector by informing his readers that he has returned with the column to provide some crucial insights into the accounting practices of CNOOC and its other Stabroek Block partners, Hess Corporation and ExxonMobil. More importantly, Ram with his expert analysis, intends to show what it all means for Guyana.
Following his assessment of the company’s latest financial statements, Ram intimated that CNOOC operates as an offshore company in Barbados. For decades, that CARICOM country has operated as a tax haven. In other words, Ram told Kaieteur News that Barbados shields the profits of companies from taxation.
Ram said one ought to remember as well that CNOOC Guyana Limited is not a Guyanese company but a Barbadian company, which operates in Guyana as a branch. “It is a deception not unique to CNOOC – it is also practiced by Hess and Esso Exploration and Production Guyana Limited (ExxonMobil’s subsidiary),” the Chartered Accountant said.
Speaking to its financial standing, Ram said, “The Company has reported a profit of $9,298 million on income of $41,419 million, a net margin of 22.4%.”
Apart from the enormous scale of the profits, one of the most interesting findings for Ram relates to the element of taxation in the company’s income statement. Ram highlighted that on one hand, the company says it is subject to the “Guyana Income Tax Act and the terms and conditions of the 2016 Petroleum Agreement.” However, not only was the Company silent on any actual tax being paid to Guyana, but that in such a case, the sum payable came out of the Government’s share of oil profits. The disparity in the two pictures he said amounts to CNOOC telling less than half a truth in its financial statements.
Further, Ram told Kaieteur News on Friday evening, that the unique arrangement concerning the payment of taxes by or for the oil companies in the Stabroek Block should be disclosed in the company’s accounts. But what is also worse, Ram said, is that the PPP/C “…seems incapable of understanding that Governments do not pay taxes for private taxpayers. Maybe, the Government should tell Guyanese which of Guyana’s tax laws permit this absurdity.”
As regards the most alarming red flag he found during his review, Ram said it would be that, “Guyana is not spared the machinations and sharp, if not illegal, practices by international oil companies across the world, most egregiously on countries like Guyana with non-existent, weak or permissively complicit regulatory controls and oversight.”
Overall, the Chartered Accountant said, “it is frightening and angering to think of the continued capitulation of the country to these destroyers of the environment, manipulators of accounting rules and plunderers of the tax system.”
In conclusion, Ram said, “it is clear that the 2016 Petroleum Agreement governing the Stabroek Block was no sacred contract, but an economic crime in which the PPP/C and the APNU+AFC Governments have played active roles.”
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