Questions for Minister Gaskin on Esso’s pre-contract costs

Dear Editor,

I have 13 questions for Business Minister Dominic Gaskin on Exxon’s Esso’s pre-contract costs

1.By the end of which year does the Minister expect to honour the US$4.4 Billion Pre-Contract Costs claim, referred to by the Public and Government Affairs Officer; Ms. Deedra Moe of Exxon’s Esso, in Stabroek News, dated September 9, 2018?

2. Is the US$4.4 Billion Pre-Con-tract Cost only for Liza-1 oil well?

3. Were any Pre-Contract Costs invoice/s submitted to the Guyana Government, subsequent to the US$460 Million invoice received in December of 2016?

4. Are the Pre-Contract Costs going to be included in the Statement of Income under the 2016 production sharing agreement in full or paid separately by the Guyana Government? Consider Depreciation and Amortization.

5. If costs exceed revenue in any given year; and the maximum 75% of revenue allowed as per the Production Sharing Agreement, to be claimed as Costs is higher than the revenue for the particular year; how is the over flow Cost going to be accounted for?

6. Are you aware of other oil contracts signed in the last ten years that allowed for Pre-Contract Costs being paid for by the owner of the oil? Consideration for Minister: Please cite contracts and amount if identifiable.

7. Is there any ceiling on the Pre-Contracts Costs that Exxon’s Esso can charge to the Guyanese Government?

8. Are there any similar oil contracts in the world, where Pre-Contracts Costs are paid for by the owner of the oil or where the payment is projected to exceed 400 times the signing bonus?

9. What benefit will Guyanese gain by auditing Exxon’s Esso’s Pre-Contracts Costs claims?

10. Are the Pre-Contract Expen-ditures by Exxon’s Esso an Investment in the normal course of business that are linked with the normal risks and rewards of exploratory business activities and such expenditures should be wholly absorbed by Exxon’s Esso?

11. Considering that we were not lumbered or saddled with Pre-Contracts Costs bills by Omai Gold Mines Ltd, Guyana Goldfields Inc., Troy Resources Guyana Inc. or Barama Company Limited; what sanity was used to justify allowing Exxon’s Esso to charge Guyana for unlimited Pre-Contract Costs?

12. Taking comfort in Dr. Clive Thomas’s reference via the Sunday Stabroek dated December 31, 2017 – that the profit allowed for sharing at a pre-agreed ratio, is only shared between the state and contractor, after the latter (Exxon’s Esso) recovers all Costs; kindly let us know if all Costs including Pre-Contract Costs have to be recovered, before Guyanese benefit from the elusive profit split.

13. Do you believe that the Pre-Contract Oil Discovery Costs is a comparatively valid and/or justifiable claim, regionally or globally or is it an unwarranted and abusive claim?

Yours faithfully,

Nigel Hinds

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