Guyana ends up with more profit from the Stabroek Block than the oil companies themselves developing the block. This was the contention of Esso Exploration and Production Guyana Limited (EEPGL) Vice President and Business Services Manager Phillip Rietema.
Rietema made this assertion during a recent engagement with the media in which he discussed the ExxonMobil subsidiary’s financials with the media. While it has been pointed out that Exxon’s financials indicate that the Stabroek Block joint venture partners raked in US$5.9B in profits last year, Rietema pointed out that much of their profits are reinvested in exploration assets.
“There are two different accounting standards. You can see under the petroleum agreement; how much revenue has been generated for Guyana. From inception to today, it’s over US$2 billion. It’s in the range of GY$440 billion. As I noted, we have been investing greater than our profits, since inception. To date, the co-vees have, together, invested about GY$4 trillion.”
“And we’ve recovered, under the PA, about GY$2.5 trillion. So, if you juxtapose that, to date if you calculate our cash flow, it’s a negative GY$1.5 trillion. Whereas the state is in the order of half a trillion positive. And will always be the case that Guyana gets higher profits than the co-vees.”
The Vice President further pointed out that an examination of their aggregate financials will show that EEPGL did not get any revenue from the Stabreok Block until after the start-up of the Liza Phase One project… though they’ve been present in Guyana since 1999 and initiated exploration activities in 2008.
“If you go back and you see our financial statements, you go back over time, you can calculate the aggregate revenue just by adding up, year by year, the revenues. And you’ll find we didn’t have any revenue until 2020. During that period, we were still investing heavily in the projects and the country.”
“We started to generate revenue in 2020 when Destiny was online. And revenue has been increasing, particularly this year now that we have a second project online. And we would expect to see revenue continue to increase over time as we add additional projects and production,” Rietema explained.
Rietema also assured that for future expenses, their assets will be used to meet any financial demands they may have. According to Rietema, ExxonMobil Guyana is far from the assetless company it has been portrayed in some sections of society, including the ruling of High Court Judge Sandil Kissoon.
“As a co-vee group, if you take our financial statements, Hess and CNOOC as we’ve noted, the total assets are in the range of US$20 billion. Those assets reflect all the investments we have made today and are generating, as you see, significant cash flow for Guyana and the co-vees as you see. And those assets and the cash flow they generate can be used to deal with any expenses in the future,” Rietema said.
Exxon, through its local subsidiary EEPGL, is the operator of and holds 45 per cent interest in the Stabroek block. Exxon’s remaining co-venture partners in the Stabroek Block are CNOOC Petroleum Guyana Limited, a wholly-owned subsidiary of Chinese company CNOOC Limited that holds a 25 per cent interest in the Exxon-administered Stabroek Block, and Hess Guyana Exploration Ltd, which holds 30 per cent interest.
According to Exxon’s audited financial statements, EEPGL garnered GY$577.7 billion in profits from their local operations last year. Meanwhile, GY$239.7 billion went towards their operating expenses, out of a total revenue stream of GY$876.8 billion.
Exxon’s investments in Guyana include the approximately 200 kilometres of a subsea pipeline it will be running from the Liza Destiny and Liza Unity floating production, storage and offloading (FPSO) vessel in the Stabroek Block to the shore as part of the gas-to energy project.
ExxonMobil is meanwhile expected to recover the cost of the US$1 billion invested into the pipeline to bring the gas to shore, when the Guyana Government sells the gas from the project. This will be done over a 20-year period and at a fixed annual rate of US$55 million.
In budget 2023, the gas-to-energy project received a $43.3 billion allocation from the State. This allocation is in addition to the $24.6 billion injected into the start-up of the transformational project, which includes the construction of an Integrated Natural Gas Liquid (NGL) plant and the 300-megawatt (MW) combined cycle power plant at Wales, WBD.
The NGL and 300 MW power plant components of the gas-to-shore project, are meanwhile expected to cost US$759.8 million and will be financed through sources that include budgets and loan financing.
