Figures contained in the 2017 financial statements of Esso Exploration and Production Guyana Limited indicate that the three-party set up of Esso, Hess and CNOOC Nexen will spend well over five hundred billion dollars ($500,000,000,000) up to December 2019. The three companies signed a sweetheart deal with then Minister of Natural Resources Mr. Raphael Trotman one year after Esso’s parent ExxonMobil had announced the world’s largest oil find in 2015.
Put another way, if US$10 (approximately $2,100) of this sum is applied to every barrel of oil, it will require over two hundred and forty million barrels of oil before the full sum is recovered. On the more positive side, once these costs, which are recoverable costs under the 2016 Agreement, are recovered, only ongoing capital expenditure and operating costs will be charged to cost oil for the remaining 4 billion barrels of oil.
Readers of this column will recall that in Column #44, I challenged the veracity of the ExxonMobil’s pre-2016 pre-contract cost of US$460 million or approximately $96 billion which Esso and its two partners had reported to have spent at December 2015. Audited figures of the three companies up to 2017 December showed a total expenditure of $354 billion. Consistent with international accounting standards, referred to as IFRS, Esso has set out its capital commitments for the years 2018, 2019, 2020 and thereafter. Here is a restatement of those commitments…..