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Exxon sold portions of Stabroek Block twice to Shell but no money recorded in books – Chris Ram

Exxon sold portions of Stabroek Block twice to Shell but no money recorded in books – Chris Ram

ExxonMobil, News, Oil & Gas

Kaieteur News – Chartered Accountant, Christopher Ram has accused ExxonMobil of engaging in “dodgy accounting” practices after learning that the company sold rights for the Stabroek Block twice but never accounted for it once.

Chartered Accountant, Chris Ram

Chartered Accountant, Chris Ram

In a letter published in the Stabroek News, Ram highlighted how Exxon, with the complicity of the PPP/C Administration, was able to set the stage for its financial outmaneuvering of Guyanese regulators.

Ram explained that a few months after being awarded the petroleum licence for the Stabroek Block in 1999, ExxonMobil Guyana Limited, formerly known as Esso Exploration and Production Guyana Limited (EEPGL), claimed “force majeure” of the entire contract area spanning 26,808 sq. km. Force Majeure is a legal clause that excuses a party from performing their contractual obligations due to circumstances beyond their control.

Exxon’s reason for invoking this provision was due to a border issue involving Suriname and Guyana at the time. Ram stressed however that the issue, one that was subsequently settled, was at one extreme end of Exxon’s contract area. Be that as it may, he noted that Exxon still claimed that it was prevented from carrying out its contractual obligations, presumably within any part of the contract area. “What a brazen lie. Yet, the PPP/C Government meekly acquiesced,” he said.

After force majeure was lifted in 2008, Ram said Exxon and the PPP/C administration entered into an Addendum to the 1999 Agreement. This he said allowed for the modified description of the contract area, the relinquishment obligations, and the initial period of the exploration programme. These changes he noted paved the way for Exxon to move ahead in 2009 and sell  25 percent of the block to Shell, another oil major.

The Chartered Accountant said the undisclosed sums received from Shell never showed up in Exxon’s local books. “That was dodgy accounting at best,” said Ram. Having gotten away with that act, Ram said the company did it again, this time in 2011, after Shell forked out more money to double its participating interest. “Those moneys never found their way into the books of Esso,” Ram said.  “Shell later withdrew and in 2014, Esso sold participating interests to Hess (30%) and CNOOC (25%) in the Block. Effectively, Exxon sold the same rights twice, but never accounting for it once.”

Ram further noted that those revenues should have been accounted for as credits, thus reducing the amount of pre-contract cost recoverable by Exxon, totalling US$460M. As a result of this anomaly, Ram said it is anyone’s guess if Exxon may have recovered as much from Shell, Hess and CNOOC as they themselves may have invested. Ram said the situation is as such that Exxon has made profits without even having to invest their own money.

He surmised that this is just a clear example of the company showing the nation its true colours to the nation during the first decade of this century, yet authorities refuse to accept it.