ExxonMobil’s subsidiary, EEPGL registered a massive profit of $577.7b for 2022, a mind-boggling 437% increase from the previous year.
On Wednesday, ExxonMobil’s local office released the Esso Exploration and Production Guyana Limited (EEPGL) annual report which showed that its profit – which the report describes as comprehensive income – was $577b compared to $132b. The stratospheric increase in profit would be due to the combination of the full-year production from two platforms in addition to higher oil process. While EEPGL’s profit was $577b, Guyana received around $240b in profit oil and royalties for 2022, the report said.
EEGPL revenue for 2022 went up to $876b from $254b in 2021, a 245% jump.
Interestingly exploration costs plunged from $26.2b in 2021 to $8.7b in 2022. On the other hand, production costs rose from $26.2b in 2021 to $39.7b last year. Administrative expenses rose marginally from $17.7b to $18.7b while lease interest zoomed from $6.6b to $21.9b.
Also listed in its expenditure was royalty to Guyana. This figure escalated from $5.8b in 2021 to $18.8b. Royalty is meant to come out of EEPGL’s profit and not be claimed as cost oil.
Included in the Statement of Profit or Loss and other Comprehensive Income is an entry for income tax expense of $59b. This is what Guyana would have earned in addition to its take if it hadn’t subscribed to an agreement where it agreed to pay taxes on behalf of EEPGL.
EEPGL’s annual report said that it delivered over 100 million barrels of production from the Liza Destiny and Liza Unity Floating Production Storage and Offloading vessels (FPSO’s), generating gross revenues for the block of US$9.8 billion. This, it said, enabled recovery of US$7.4 billion of costs, profit share of US$0.5 billion to EEPGL, and payments totaling approximately US$1.4 billion to the Natural Resource Fund through the 50 percent profit share and two percent royalty paid to the Government.
The company also updated what was happening with its other oil extraction projects.
Benefitting from the ‘design one, build multiple’ approach, EEPGL said that its third project, Payara made excellent progress in the year. The prosperity FPSO arrived in Guyana’s waters in April and is due to begin oil production shortly.
The Yellowtail Project, the fourth Stabroek Block development, achieved a Final Investment Decision (FID) in April 2022. Thea annual report said that it will be the largest project to date in Guyana, developing an estimated 900 million barrels of oil. In 2022, fabrication of the hull for the Yellowtail FPSO, One Guyana, was completed in China and was moved to anchor offshore Batam, Indonesia. Drilling and completion activities continued in line with the plan to have 14 development wells ready for project start-up. In support of Yellowtail and other future projects, the report noted that a 20-year contract was signed with the Vreed-en-Hoop Shorebase (VEHSI), a Guyanese and Belgian joint venture, in Region 3. This shorebase will help enable long-term local content growth by developing a dedicated projects shorebase through local construction and fabrication.
Environmental studies
EEPGL, which has come under attack over the impact of its operations on the environment and flora and fauna, said in the report that “environmental studies are conducted to further the understanding of wildlife species, ecological habitats, and ecosystem services in Guyana. These studies, among others, have included the comprehensive monitoring of coastal and marine birds, coastal sensitivity and ecosystem services mapping, and data collection and analysis to support the quantitative assessment of fish stocks and fishing activities. In addition, we are working in collaboration with the Guyana Protected Areas Commission on a turtle telemetry and population study to understand the nesting and dispersal habits of leatherback, green, olive ridley and hawksbill turtles in the Shell Beach Protected Area”. It said that the study will build on the results of a previous monitoring and tagging programme performed in 2018-2019.
The report also adverted to a programme with the Iwokrama International Centre for rainforest conservation. The report said that specific activities include the establishment of a mangrove centre, bi-weekly road and river monitoring for restoration and poaching activities in the Iwokrama forest, monitoring of coastal ecosystems, hosting of Wildlife Clubs for young people in local communities and training programmes for rangers and field personnel.
In relation to environmental management, the report said that the application of robust and responsible environmental management practices is vital to all of its operations.
“All waste and emission streams are managed in compliance with strict regulatory standards and reported to the Environmental Protection Agency.
“Produced water from the reservoir is separated and treated in several stages onboard the FPSOs and discharged only after the oil content has been reduced below regulatory prescribed limits. The effectiveness of water treatment is verified through robust monitoring protocols that include daily sampling of the discharge stream.
“We have implemented a Leak Detection and Repair (LDAR) program across our operations to proactively detect and repair methane and other hydrocarbon leaks. The program uses an optical gas imaging camera to detect emissions that are invisible to the normal eye.
“Flaring emissions are monitored based on continuously operating flow meters that measure the amount of gas flared. During typical oil and gas operations, natural gas is produced along with crude oil from the reservoir and mechanically separated on board the FPSOs. Following separation, both the Liza Destiny and Liza Unity FPSOs reinject the majority of the produced gas back into the reservoir. Only a finite amount is sent to flare to maintain technical processes essential for safe and reliable operations; known as background flare”, the report said.
Fair and adequate
As part of the local content workforce strategy, the report said that EEPGL identifies and implements programmes to give “fair and adequate opportunity and first consideration for the employment of Guyanese nationals having appropriate qualifications and necessary experience to safely and competently perform job responsibilities”.
It stated that over 5,000 Guyanese workers supported activities of EEPGL and its reporting contractors by the end of 2022 and Guyanese represented over 65% of the overall workforce supporting its oil and gas activities in Guyana.
EEPGL added in the report that it is committed to identifying opportunities for local suppliers to participate in the market and to provide “full, fair and transparent opportunities for Guyanese businesses”.
To date, it said that more than 1,500 unique Guyanese vendors have benefited from opportunities within EEPGL’s supply chain and it said that in 2022 the company and contractors spent over $80 billion with Guyanese suppliers. Since the first discovery of oil in 2015, EEPGL and its contractors have spent over $180 billion with Guyanese suppliers.
Through year-end 2022, the report said that EEPGL and its CoVs have invested more than $4 trillion in the Stabroek Block and have committed to invest an additional $4 trillion through 2027 in additional projects (Payara, Gas-to-Energy, Yellowtail, Uaru).
In relation to measurement, EEPGL said in the report that its team is focused on ensuring that oil and marine fuel are accurately measured. In 2022, it said that 101 million barrels of oil were produced and sold while another 1.3 million barrels of marine fuel were purchased. These volumes are tracked via industry defined best practices.
“Oil sales volumes are measured via custody transfer metering skids and analyzed by independent laboratories to ensure integrity. Independent surveyors, as well as officials from the Guyana National Bureau of Standards and the Guyana Revenue Authority witness the custody transfer and measurement of oil volumes”, the reports stated.
In the report, EEPGL stated its commitment to transparency.
“As we conduct our business, we follow robust stewardship processes that facilitate oversight and dialogue amongst stakeholders. EEPGL continues to participate in numerous Government of Guyana engagements on targeted topics including operations, expenditures, production sharing and revenue. These structured efforts enable the government to effectively manage and understand the significant value drivers from oil and gas activities, and build capacity not only as regulators, but as an important stakeholder in the development of Guyana’s oil and gas resources”, the report added.
