Letter: ExxonMobil Headquarters justified

The content originally appeared on: News Americas Now

Black Immigrant Daily News

The content originally appeared on: INews Guyana

Dear Editor,

I read with deep interest the statement of Vice President Dr. Bharrat Jagdeo in the media, where he stated that: “The ExxonMobil’s Headquarters currently being constructed at Ogle, East Coast Demerara (ECD) is cost recoverable, and is justifiable, considering the scale of the activities being undertaken at the facility” (Guyana Times, 13th February, 2023).

Vice President Jagdeo further went on to say: “To manage a million barrel a day industry, from a safety and operational perspective, you need a building of that nature. A high-end building. Also, with advanced capabilities” (Guyana Times, 13th February, 2023).

Personally, I am in agreement with Dr. Jagdeo and the Government’s supportive position that he has taken: for ExxonMobil to construct such a multi-million-dollar, state-of-the-art Headquarters here in Guyana. I was in support of Vice President Dr. Jagdeo’s previous position that he had taken on the matter: where he, prior to 2020, had indicated that construction of such a multi-million-dollar Headquarters facility by ExxonMobil should not be cost recoverable, and that if the Headquarters building continued in that form, his party, which was in Opposition then, would not support the construction project being cost recoverable (Guyana Times, 13th February, 2023).

Such a multi-million-dollar, state-of-the-art, high-tech facility for ExxonMobil to house its Headquarters here in Guyana has now become absolutely necessary, and is crucial and very important to the extensive oil exploration activities that the company is presently carrying out in Guyana. I will highlight some significant reasons why the construction of the Headquarters should be allowed, and should receive the support of all Guyana:

It is cost recoverable: Vice President Dr. Jagdeo, in his statement (Guyana Times, 13th February, 2023), indicated that ExxonMobil is currently renting space, and when the cost of rental is considered, it would approximate to almost the cost of amortizing the building over time. He was in agreement with Routledge that the new Headquarters would be constructed to support solely the oil exploration operations of Exxon, and the cost would be recovered in the cost recovery mechanism. Last year, 2022, ExxonMobil had oil expenses of US$9 billion, which is more than the projected US$160 million construction cost of its new Headquarters. Renting of space accounted for a huge fraction of the company’s oil expenses (Guyana Times 13th February, 2023). Therefore, by all accounts, this is a financially feasible project with huge savings for the company and Guyana at large.

The facilities that the Headquarters will house: According to Exxon Mobil’s Country Manager Alistair Routledge, the new Headquarters are to be constructed at a cost of US$160 million. The Headquarters building would feature training facilities, an operations suite, and a control center for all the offshore operations; the fibre-optic cable which would come from floating, production, storage and offloading (FPSO) vessels, staff residential quarters, etc. These are features that are necessary to effectively support the exploration of oil in Guyana’s waters; and clearly, a state-of-the-art, high-tech facility is required to house such facilities.

The extensive oil exploration activities conducted in Guyana by the company: Exxon is projected to be producing 600,000 barrels of oil per day by next year, when the facility is completed, and over 1 million barrels of oil per day by 2027. The extent of Exxon Mobil’s oil discoveries includes a long list of over 20 projects in the Stabroek Block: The Liza discovery (May 2015), Payara (2017), The Snoek discovery (2017), The Liza Deep (2017), The Turbot discovery (2017), The Ranger discovery (2018), The Pacora (2018), The Longtail (2018), The Hammerhead (2018), The Pluma (2018), The Tilapia discovery (2019), Haimara (2019), The Yellowtail discovery (2019), Uaru (2020) etc. just to name a few. No doubt, you will agree with me that a company with such extensive oil exploration ventures does indeed need a state-of-the-art Headquarters building to effectively carry out its developmental activities.

The financial revenue to be generated by the company from the oil discoveries: Revenues which we hope would be used wisely for the development and improvement of all the people of Guyana in the area of infrastructure, education, health care, creation of job opportunities for the citizens, and the environment in a sustainable way. The Department of Public Information (DPI) stated that: “Guyana expects US$957,874,800 revenues in 2022, US$1,165,443,900 in 2023, US$1,335,315,100 in 2024, and US$1,781,842,700 in 2025. These figures – accounting for profit oil, royalties and interests – amount to US$5,240,476,500. In Guyana currency, that amounts to nearly $1.1 trillion.” (DPI January 29, 2022).

Reuters reported in April 2022 that Guyana sold its first share of crude oil from the country’s newest offshore production facility to ExxonMobil for about $106 million, (Reuters, April 24th,2022). ExxonMobil made US$55.7B in 2022, and though there is understanding and acceptance that ExxonMobil earned some of its billions from the Permian Basin and other places, plus other businesses, Guyana’s high-quality oil was a significant contributor to the company’s profits that are now the envy of the world (Kaieteur News 11 February, 2023). According to the Department of Public Information, Guyana plans to use proceeds from oil in the short term to build roads, bridges, houses, gas-fired power plants and solar energy projects (DPI, 2022). It is precisely because of these huge financial earnings and the economic development of Guyana that Exxon needs to have its state-of-the-art Headquarters building constructed to carry out its exploration activities in an environmentally sustainable, effective and efficient way.

We, as the people of Guyana, must realize than Exxon is not our enemy, and without Exxon and its affiliates, how would we possibly exploit our resources? We have no technology, no satellite-locating system, management skills, technological skills, PR skills etc., etc. I say that we embrace ExxonMobil, but we must have full insurance protection to cover Guyana and other nearby countries. We must have ringfencing (Ringfencing prevents customers of public utilities from credit risks or exposures of the parent company that may harm customers’ access to essential services).

In the early days of ExxonMobil coming to Guyana, I appealed to them to look at the human factor of the Guyanese people and our environment for generations to come. ExxonMobil should be concerned with its international reputation, which is not of the best. However, it should take the opportunity to use Guyana to showcase its humanity and care for people and for our country. I am no enemy of Exxon, and I welcome their presence. Together, let us partner for a successful venture for both Exxon and Guyana.

Sincerely,Roshan Khan (Snr)