US$20M Exxon bonus to Govt: Finance Minister ‘cannot confirm’ receipt, says he will check
Asked by the media, the Finance Minister declined to confirm or deny whether the Government was paid the sum of US$20 million by ExxonMobil when it granted the oil giant a production licence.
“I cannot confirm anything. Somebody said we have received US$20 million,” Jordan said. “I will check and see whether we did receive US$20 million. I will check and see whether we received any bonus of any kind, signature or otherwise; and how much it was, if at all.”
The allegation about Government receiving this bonus was first made by Chartered Accountant Christopher Ram. He had also said that this payment may be one of the reasons why Government was not disclosing the new contract.
“The Government of Guyana used the excuse of a new licence to extract a signature bonus — a payment made by a contractor on the signing of an agreement to take up any given number of blocks. The figure I have been told is twenty million United States dollars,” Ram had said in a column.
Government’s Petroleum Advisor Dr.Jan Mangal has said he had told the coalition Government to release the contract in the interest of transparency.
Minister of Natural Resources, Raphael Trotman, and Minister of State, Joseph Harmon, have been tight-lipped in regard to receipt of this alleged bonus. Repeatedly avowing that releasing the contract could have national security ramifications, and that the Government has been “advised” against such, Trotman has said the release of the contract is not his decision, but cabinet’s.
Last week, Opposition Leader Dr Bharrat Jagdeo promised that at his next engagement with ExxonMobil, he would bring the matter up with its officials. The former President has said that while he was briefed on the visit Government Ministers had made to Texas to meet with Exxon, the subject of the US$20 million has not come up.
The Stabroek Block is 6.6 million acres. Esso Exploration and Production Guyana Limited (Exxon’s subsidiary) is the operator, and holds a 45 per cent interest in the Stabroek Block. Hess Guyana Exploration Ltd. holds a 30 per cent interest, and CNOOC Nexen Petroleum Guyana Limited holds a 25 per cent interest.
In June 2017, Exxon was granted its formal production licence. Before that, reviews were done of the technical and environmental aspects of the Liza Project Development Plan submitted by Esso Exploration and Production (Guyana) Ltd in December 2017.
As per the agreement the coalition Government made with Exxon, there will be a two per cent royalty per barrel of oil and a 50/50 share of profits. This 2 per cent is, however, below the global average.
The Government has justified the two per cent royalty by contrasting it with the 50/50 share of the profits; an arrangement that the Government has said is a reasonable one, arrived at through the advice of experts. Some had opined that a revenue-sharing arrangement would be a better option than a profit-sharing one.
There has been a flurry of activities in the Stabroek Block, since ExxonMobil’s 2015 oil find in Guyana. In May of that year, Exxon confirmed that more than 295 feet of high-quality oil-bearing sandstone reservoirs had been encountered at its Liza 1 exploration well.
In late June 2016, Exxon’s drilling results at Liza 2 revealed more than 58 metres of oil-bearing sandstone reservoirs in Upper Cretaceous formations. The well was drilled to a depth of 5,475 metres at 1,692 metres water depth. Drilling results confirmed recoverable resources to be between 800 million and 1.4 billion barrels of oil equivalent. Data from the Liza 2 well test is being assessed.
The company has announced that it had made its third significant discovery in its drilling explorations offshore Guyana. Its partner, Hess Corporation, had noted that the Liza 3 exploratory well’s net value could be US$6.2 billion based on calculations from the Bank of Montreal (BMO) Capital Markets.
Drilling on Payara well began on November 12, 2016, with initial total depth reached on December 2, 2016. In January of this year, the oil giant had announced it had struck oil in its Payara-1 well, targeting the same type of reservoirs as the well’s Liza counterpart.