Jun 27, 2021 News
– Billions in profits moved to American parent company – Chris Ram
Kaieteur News – At the end of 2020, Hess Guyana Exploration Limited (Hess), transferred $6.9B in profits to its parent company in the USA, Hess Corporation, which was made from its 30 percent working interest in the oil rich Stabroek Block.
Following this, all that was left in its bank account was $66M. It therefore means that should Guyana suffer an unmitigated oil spill in the Stabroek Block, these are the meager resources it would have to depend on since the parent company has failed to give Guyana full coverage insurance for the Liza Phase One Project.
Exposing the state of the company’s financial affairs and what it means for Guyana was Chartered Accountant and Attorney-at-Law, Christopher Ram, in his column called, “Every Man, Woman and Child in Guyana Must Become Oil-Minded.” In one of his publications, Ram said he had examined the 2020 financial statements of the subsidiary and was appalled at the findings.
Ram said he found that the total value of assets of the Branch at year-end was $469,363 million of which property, plant and equipment accounted for 91%, with the remainder spread fairly evenly over cash, receivables and deferred income tax asset. He also discovered that at December 31, 2020, Hess is shown as having an advance to ExxonMobil’s subsidiary, Esso Exploration and Production Guyana Limited (EEPGL), of some $13,167 million while an amount of $14,879 million is shown as owed to Esso.
He also found that, “The Branch’s bank balance at year end was $66 million while its commitments for capital expenditure on the Stabroek Block was approximately $544.0 billion (United States Dollars: $2.6 billion), to be incurred over the next several years.”
Ram said it is unclear where this money will come from since at December 31, 2020 even the parent company’s cash resources stood at US$1,739 million while its total debt and lease obligations stood at US$8,534 million.
Upon noting the foregoing, Kaieteur News asked the lawyer if it is not more than enough for Guyana to pressure the parent company to give a formal agreement and evidence that it will handle the costs associated with any oil spill. Ram answered in the affirmative while adding, that it is necessary that the company demonstrate that it has the necessary funds for future projects.
If Guyana fails to do this, Ram said Guyana could expect Hess to take more loans to finance future projects, which the country would ultimately have to pay for along with the interest rates.
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