What Guyana needs to know about ExxonMobil– Pt 1….Will the country get a fair share for its oil wealth?

What Guyana needs to know about ExxonMobil – Pt 1…. Will the country get a fair share for its oil wealth?

Jun 18, 2017 News, What Guyana needs to know about ExxonMobil, http://www.kaieteurnewsonline....-for-its-oil-wealth/

Introduction

Oil is perhaps the most profitable venture known to mankind. Therefore, it is no surprise that news about the coming of Oil and Gas has brought much excitement. Many Guyanese are engaged in discussions about what this could mean for the nation’s development and how economically different the country could be in the next ten years.

The company responsible for the thrill and anticipation over looming oil revenues is US oil giant, ExxonMobil.

The area drilled by ExxonMobil affiliate, Esso Exploration and Production Guyana Ltd, has encountered more than 295 feet (90 meters) of high-quality oil-bearing sandstone reservoirs.

The news would be the most significant one for Guyana which is a net oil importer. Guyana has been hoping for something like this to help change its fortunes.

Already, Exxon has acquired its Production Licence and an Environmental Permit to kick start works in the Stabroek Block which located approximately 120 miles offshore Guyana.

Extraction from its Liza field Project is expected to commence in 2020 at an initial rate of 120,000 barrels of crude per day in the first phase. A Floating Production Storage and Offloading (FPSO) vessel will be providing the main infrastructural support for the project. The Liza reservoir is estimated to contain between 800 million and 1.4 billion barrels of oil.

In the mean time, policymakers are still working out the bolts and nuts of the Agreement with the company to ensure that the nation gets a fair share for its oil. So far, Exxon and the government have agreed that Guyana will receive a two-percent royalty on gross earnings and 50 percent of the “profits” of the oil proceeds when production starts in 2020.

 However, there has been deep worry about that 50/50 share as Exxon will have to recover it investments first before the profits are split. The company has already made clear that its Final Investment Decision (FID) for phase one of the Liza Development Project is estimated to cost US$4.4B. 

While the rest of the contract is still being worked out, it is prudent for one to ask, how much do we really know about ExxonMobil? How much power does this company possess? How far and wide do the tentacles of its vast empire reach across the world?

In this ExxonMobil series, Kaieteur News, through detailed research, will present the facts on what you really need to know about one of the world’s most powerful and most profitable giants in the oil and gas sector.  

While it is headquartered in Irving, Texas, ExxonMobil has operations in a wide cross section of the world. In fact, Exxon has operations in over 40 countries which are spread across North America, South America, the Middle East, North Africa, Sub-Saharan Africa, Europe and Asia Pacific.

The countries in which it operates include Canada, Guatemala, Mexico, Egypt, Iraq, Argentina, Brazil, Colombia, Qatar, Saudi Arabia, Iraq, United Arab Emirates, Angola, Chad, Cameroon, Madagascar, Nigeria, Equatorial Guinea, Tanzania, Australia, Belgium, Italy, China, Norway, Ireland, France, Finland, and Papua New Guinea.

With 37 oil refineries in 21 countries constituting a combined daily refining capacity of 6.3 million barrels, ExxonMobil is the largest refiner in the world.

Significantly, the company, which has been around since 1999, has a net worth of over US$400B.

A corporation with such a monetary arsenal, while employing some 80,000 persons is not your everyday oil tycoon. Exxon’s annual revenues are actually larger than the yearly GDP of over 100 countries. These include:

  • Thailand
  • Denmark
  • Nepal
  • Greece
  • Malaysia
  • Finland
  • Botswana
  • Venezuela
  • Greece
  • Colombia
  • Chile
  • Hong Kong
  • Israel
  • Egypt
  • Ireland
  • Pakistan
  • Ukraine
  • New Zealand
  • Vietnam
  • Iraq
  • Lebanon
  • Jordan
  • Estonia
  • Iceland
  • Singapore

Without question, Exxon’s net worth catapults it to an entirely new level. One can easily liken Exxon to even being a powerful state.

This very point was made by several reputable news entities and independent reporters around the world, including USA journalist, Rachael Maddow, in one of her video features on the controversial company. (https://www.youtube.com/watch?v=8aG7iOyWd0w.)

“NO ONE TELLS THOSE GUYS WHAT TO DO”

History can attest that Exxon Mobil is not a company that takes orders or is even told what to do. Even the leader of the free world did not enjoy that luxury.

One significant case in this regard took place in 2001.

American Journalist and Dean of the Columbia University Graduate School of Journalism, Steve Coll, captured in his book, “Private Empire: ExxonMobil and American Power” how the Bush administration shared a close relationship with Exxon.

Coll noted an exchange between former USA President George W. Bush and the then Indian Prime Minister, Atal Bihari Vajpayee.

Worried that Exxon was delaying a deal with India’s largest state-owned oil company, Vajpayee asked Bush: “Why don’t you just tell them what to do?” The former President’s response was telling. He said, “Nobody tells those guys what to do.”

The situation today is no different. Exxon is now closer than ever with the USA government. In fact, the former Head of Exxon, Rex Tillerson, is now the Secretary of State in the Trump administration.

Be that as it may, the Guyana Government is insisting that it is able to negotiate with this massive empire and safeguard the nation’s patrimony.

To be continued…

What Guyana needs to know about ExxonMobil – Pt 1…. Will the country get a fair share for its oil wealth?

Jun 18, 2017 News, What Guyana needs to know about ExxonMobil, http://www.kaieteurnewsonline....-for-its-oil-wealth/

In the mean time, policymakers are still working out the bolts and nuts of the Agreement with the company to ensure that the nation gets a fair share for its oil. So far, Exxon and the government have agreed that Guyana will receive a two-percent royalty on gross earnings and 50 percent of the “profits” of the oil proceeds when production starts in 2020.

 However, there has been deep worry about that 50/50 share as Exxon will have to recover it investments first before the profits are split. The company has already made clear that its Final Investment Decision (FID) for phase one of the Liza Development Project is estimated to cost US$4.4B.

Most likely, Guyana will not receive any portion of the 50/50 proposal for an extremely long time.

The best they may receive is 2% or probably much less.

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