Ignore Exxon’s ‘misleading’ billboards – Opposition tells Guyanese

Dec 08, 2022 News

Kaieteur News – The main political opposition APNU+AFC believes that until Guyanese see a satisfactory audit of oil giant ExxonMobil’s costs, the nation will not know the true benefits it is receiving from oil production in the Stabroek Block.

In an exclusive interview with Kaieteur News yesterday, Opposition Economist Elson Low reasoned that any pronouncements on the share of profits the country is receiving should be set aside, whether they are coming from Exxon, the government or anyone else.

Meanwhile, Exxon, in at least 10 billboards erected across the country, has sought to convince Guyanese that the country is receiving 52 percent of the total profits from the sector.

Opposition Economist, Elson Low

To this end, Low said that while the Production Sharing Agreement (PSA) for the lucrative Stabroek Block provides a 2% royalty and for 50% percent of the profits to be split between Guyana and the oil company, the country could still be getting less. “Based on the structure of the PSA, if Guyana fails to audit effectively, it leaves us vulnerable to not getting our fair percentage that we should get from the PSA,” he said.

The lopsided deal Guyana entered into with Exxon grants the company permission to deduct 75 percent of the earnings from production to cover its expenses. This means that the remaining 25 is then split between the two parties. The country’s share therefore amounts to just over 12 percent, after the 75 is taken out. After the two percent royalty is added, Guyana’s total benefit is merely some 14.5 percent.

Using the 52 percent rate, the Economist pointed out that Guyana could easily be getting as little as 30 or 40 percent of the real profits, which means 10 to 20 percent less as a result of its failure to verify the costs Exxon deducted to develop the resource.

When he was asked specifically if he believes this is the current state of affairs, the Economist explained, “That is a distinct possibility but we wouldn’t know and I don’t want to accuse Exxon of anything until we have the report on a proper audit. If we have a proper audit, and if we see things that are problematic, we would then call for an investigation, but that is only if we see things that are problematic.”

Low stressed the importance of the government fulfilling its responsibility to the Guyanese people by producing a satisfactory audit as: “It is possible that we are getting far less than we should, and a proper audit would reveal this.”

Exxon has nonetheless embarked on a billboard campaign across the country to “brainwash” Guyanese as to the benefits from the oil sector, according to Publisher of this newspaper, Mr. Glenn Lall.

On the front page of Tuesday’s edition of the Kaieteur News, Lall denounced the oil company for erecting a billboard just over the Demerara Harbour Bridge with a message that Guyana is getting 52 percent out of the Stabroek Block deal.

The company also indicated on the billboard that Guyana has received more than $280B since oil production started here late 2019.

Speaking on this issue, the newspaper publisher said citizens need to know that the cost to erect the very billboard is being recovered by ExxonMobil based on the lopsided contract it signed with the Guyana Government.

ExxonMobil Guyana in a letter on Tuesday afternoon responded to the businessman insisting that the billboards erected across the country is not being recovered as an expense.

The company’s Media Advisor, Kwesi Isles, in a letter to the Editor maintained that the information presented on the billboards is factual.

Isles explained, “The information displayed on the billboard in question is factual and can be verified. It is no secret that the 2016 Production Sharing Agreement (PSA) allows the Stabroek block co-venturers (CoVs) to recover their investments – up to 75 percent of oil produced and sold in a given month.”

Subsequently, the Exxon representative noted that all profits over and above the cost to find, develop and produce oil are split 50/50 between the Government of Guyana and the CoVs.

“An additional two percent of all oil produced and sold is paid out to the Government as a royalty and comes out of the CoVs share of the profit. The result is 52 percent of all profit goes to the Government of Guyana,” the company said.

Notwithstanding Exxon’s claims, the Kaieteur News Publisher maintains his position. “When I see the financial statements along with the bills to show Guyana that this billboard cost is not coming out as cost oil then I will withdraw my comments,” Lall said in response to Exxon’s letter.

Further, Lall asserted his position on the ExxonMobil billboards mounted at several locations in the country. “I also stand my ground as to the billboard comments. I am maintaining that the information on the billboard is misleading and that Exxon should tell the Guyanese people the whole truth.”

In fact, he argued that the response from the multinational company failed to address the misleading information on the billboard.