By Devina Samaroo
Given the importance of transparent governance in oil-producing countries, ExxonMobil says it is prepared to make its contract with the government public if all other firms in the local extractive industry are so legally required.
Despite this willingness, ExxonMobil’s Senior Director of Public and Government Affairs, Kimberly Brasington said the company is simply following the administration’s lead on the issue.
“Right now, we are taking our lead from the government. It is not legally or really even something the government is urging us to do,” she told News Room during an interview on Monday.
Amid calls for greater transparency regarding the agreement, the government has demonstrated an unyielding commitment to keeping the oil contract a State secret and has cited two reasons why full disclosure is not the best option.
Prime Minister Moses Nagamootoo had cited the unresolved border row between Venezuela and Guyana as a security risk and as a reason for not making public the contract. The other reason government advanced is the confidentiality clause in the Petroleum Act.
Brasington explained that the only reason ExxonMobil would be hesitant to release the contract is if it infringes upon its competitiveness.
“In this country, because it’s not a legal requirement that all producers disclose contracts, it puts ExxonMobil and any commercial entity in that position at a disadvantage to disclose the terms of our contract. So whoever is coming in to bid on an open block would know exactly what out terms are,” Brasington stated.
She assured, however, if it becomes a legal requirement, then ExxonMobil is more than willing to oblige.
“For ExxonMobil, we believe in transparency …so we are committed to working with the government to figure out what is best for this country and how we are going to do that. So if it’s contract disclosure, that’s one way,” she explained.
Brasington also explained that one avenue, outside of a full disclosure of the contract, which allows both government and ExxonMobil to practice accountable and transparent governance is the Extractive Industries Transparency Initiative (EITI) process – which Guyana is in the process of becoming involved.
EITI is a global standard for the good governance of oil, gas and mineral resources. One of the requirements under this system is for both the government and the company to independently declare the revenues it has received/given.
ExxonMobil will commence the production of oil in the Liza field in 2020 and Guyana stands to benefit financially from the massive revenue inflows projected.
The government will be receiving 2% royalty on gross earnings and 50% profit but only based on a calculation whereby ExxonMobil gets to recoup its investment which currently stands around US$2B.
It comes down to how that money is spent by the government to advance the country but there are presently no clear plans by the governing administration regarding how the oil money will be invested.
There are major concerns that Guyana will be cursed with mismanagement of the oil revenues and the Dutch disease which plagued other oil producing nations. ExxonMobil initiated oil and gas exploration activities in Guyana in 2008, collecting and evaluating substantial 2-D and 3-D seismic data that led to the company safely drilling its first exploration well in 2015.
In May 2015, ExxonMobil announced an oil and gas discovery in Guyana – the first significant discovery for the country.
ExxonMobil’s affiliate Esso Exploration and Production Guyana Limited (EEPGL) operates a venture office in Georgetown. EEPGL holds an interest and is the operator in the Stabroek, Canje and Kaieteur Blocks, offshore Guyana. The Stabroek Block is 6.6 million acres and is located approximately 120 miles offshore Guyana. The Liza, Payara and Snoek discoveries are located in the Stabroek Block.
ExxonMobil is venturing into production of oil in Liza phase one – a process which will last approximately 20+ years. Simultaneously, ExxonMobil will be conducting 3D seismic in the Kaieteur and Canje Blocks and will be contemplating ways to develop the discoveries in Payara and Snoek.