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Dear Editor,
See Dr. CK Hunte’s letter in the June 21, 2024 edition of Stabroek News, titled: “Bhagwandin misleads people by suggesting that the NRF report has disaggregated data from EMGL, Hess and CNOOC.”
Dr. Hunter dismissed my response as a customary “red herring” and that I was once again trying to divert attention from the real issue he raised in his letter, which was the “royalty shortfall.” He went on to argue that the data in the Natural Resources Fund (NRF) report was not disaggregated by ExxonMobil Guyana (EMGL), HESS and CNOOC.
The term “red herring” means “to divert attention from the real issue; to mislead.” The issue at hand is no issue. No red herring; I am simply trying to help readers and Dr. Hunt understand how to properly reconcile and analyze publicly available data from the oil and gas industry. It’s simple. But Dr. Hunt seems determined to complicate something simple.
I would be remiss if I did not highlight the lack of disaggregated data in the NRF report, which, according to Dr. Hunte, he did not address in his previous correspondence.
If readers re-read his original letter published in the Stabroek News on 12 June 2024, and his follow-up letter published in the Stabroek News on 16 June 2024, readers will see that in both cases Dr. Hunter’s concerns were based on aggregated data.
He never states the breakdown of production data and income in the “table”. So who is red herring by introducing a new dimension after I have fully addressed his initial concerns? Isn’t this an example of “red herring”, Dr. Hunter?
Furthermore, the lack of disaggregated data in the NRF report is completely irrelevant and meaningless. The reason is simple.
Under the Petroleum Agreement (2016), there is only one operator, namely Article 2.2(a) of the Petroleum Agreement states:
“Esso shall be the Operator responsible for carrying out the day to day activities of the Contractor under this Agreement. The right to operate shall not be transferred to a party other than the Contractor except with the approval of the Minister, which approval shall not be unreasonably withheld. In the event of a transfer of the right to operate to a party other than the Contractor, the Minister shall be notified in writing.” The operator referred to here is ExxonMobil Guyana.
It is worth noting that the “contractors” include EMGL, HESS and CNOOC (HESS and CNOOC are joint venture partners). As far as I know, there has been no change in the operating rights of the contractor parties. Therefore, for the reasons stated above, production data, revenues, royalties and profit oil are not disaggregated in the NRF report. It is an operator.
However, in terms of preparing financial statements, each party must prepare its own financial statements based on the joint ownership structure of the operation. In other words, HESS, CNOOC and EMGL do not operate their own FPSOs (if that were the case), each company would need to report separately. But this is not the case; one company is the operator, and therefore one company is responsible for all reporting in an aggregated format.
Finally, regarding the report Dr. Hunter wanted me to prepare, that too was unnecessary. The NRF report contained more than enough information for public use and, in fact, contained far more detail than Dr. Hunter’s “table” highlighted.
Sincerely,
Joel Bhagwantin
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