Every Man, Woman and Child in Guyana Must Become Oil-Minded (Column 171)
Introduction
Readers will recall Column # 170 dealing with the request by three U.S. senators to ExxonMobil seeking information on the company’s tax arrangements under the 2016 Petroleum Agreement. Their direct concern is whether the U.S. treasury is subsidising Exxon’s operations in Guyana to the benefit of CNOOC, one of Exxon’s Chinese partners in the Stabroek Block.
Ever since that letter was made public, interest in the issue has intensified – both abroad and in Guyana. At a press conference held at the Exxon’s new Guyana Headquarters in suburban Ogle, hosted by ExxonMobil Guyana’s President Alistair Routledge – sporting the Guyana Arrowhead – the local media, sensing a story that finally had a Washington connection, pressed for answers.
To a question whether Exxon would provide the information sought by the senators – and long sought by the media in Guyana – Routledge was his typical evasive self. “We haven’t applied any tax credits. We are working with the GRA on paperwork on taxes,” Routledge said – an insult to the intelligence of every Guyanese or person of any intellect. That single sentence has opened a window into what may be the most brazen accounting fiction in the country’s history. Unless there is an intent to cook up something, the claim is neither accurate nor credible. It masks a structure so distorted that even its defenders cannot explain.
Before we analyse his response however, let us look at another statement that is blatantly misleading – that the company continues to be cash flow negative on a cumulative basis. Was Routledge unaware that in 2024, the branch distributed some $674,454 Million and still ended the year with more funds than at the beginning of the year?
No credit
Back to the press conference and Exxon’s and its tax practices. Unsurprisingly, Routledge tried to dismiss the drawn-out controversy as the product of paperwork. But what paperwork, he did not say. The Agreement could not be clearer. The Minister pays. The GRA issues the receipt. The obligation is discharged. That is the entire mechanism. There is no “working on paperwork.”
There is only doing it or concealing it. If, six years after first oil, the parties are still fumbling with “paperwork,” it means either the Agreement has not been executed as written or it has been executed but hidden. Either way, it is a national embarrassment.
Accounting credit
While Routledge performs confusion in public, the financial statements of ExxonMobil Guyana Ltd., Hess Guyana Exploration Ltd., and CNOOC Petroleum Guyana Ltd. tell a different story – they are all taking the credit.
ExxonMobil Guyana Ltd. (2024) reports: “Revenue includes non-customer revenue of G$260,155.7 million … relating to Article 15.4 of the Petroleum Agreement,” and recognises a matching income-tax expense. That is the classic gross-up accounting technique: record fake revenue and fake tax so the books look balanced.
As for Hess Guyana Exploration Ltd. (2024), its financial statements disclose that “A portion of gross production … is used to satisfy the branch’s income-tax liability and is recognised as sales revenue.” The Government’s oil becomes the company’s “revenue” and its “tax.”
As for the junior, non-American Chinese partner, CNOOC Petroleum Guyana Ltd.’s financial statements go even further, stating that “The Minister accepts the appropriate portion of the Government’s share of profit oil as payment in full of the Contractor’s income-tax liability.” That language does not reflect Article 15, which requires the Minister to pay the tax to the Commissioner-General of the GRA – not merely to “accept” oil.
Amazingly, in a matter as important as this, none of the companies thought it useful, let alone necessary, to disclose this little inconvenient fact.
The black hole
In all three cases the same pattern appears: the companies book the tax as paid, recognise it as revenue, and enjoy the credit. What happens thereafter is the black hole where Mr. Routledge wants to take us, despite the clear language of Article 15 of the Agreement: The Minister must pay to the GRA the tax charge of the oil companies out of Guyana’s share of oil, is said to pay, the GRA is to issue receipts and deliver “proper tax certificates in the Contractor’s name”.
Article 15 states that the tax must be paid from the Government’s share of oil revenue. Where, then, is the evidence of that payment? The Natural Resource Fund shows no deduction, no debit, no outflow. But no one – including the NRF investment committee and the auditors – seem to care a hoot.
In effect, the tax exists only in the companies’ ledgers — not in Guyana’s public accounts. A phantom transaction generates a real benefit to the contractors, while the Government works on a certificate for a payment it never made.
Confusion
This confusion is not accidental. The Government’s failure to manage the Agreement – or even to understand its workings – has produced a system in which no audit has been completed, no receipts have been verified, and no public officer can explain the basic arithmetic of the contract.
The Commissioner of Information, who falls under the Office of the President, has ignored lawful requests for disclosure. The Minister of Natural Resources has neither published the tax receipts nor accounted for the debits from the Government’s share of profit oil. And nothing coming out from the Guyana Revenue Authority, to suggest that it has received the taxes “paid on behalf of the contractor”. This is the contract that is so sacred that it even trumps the country’s sovereignty, public officials’ integrity and most of all, the President’s thundering commitment to review and renegotiate”.
Even a cake shop, run on a basic exercise book and a lead pencil, would manage its accounts with more care than this trillion-dollar industry. The result is a charade: a government pretending to pay, companies pretending to be taxed, and auditors pretending not to notice.
Next week we will leave Georgetown for Houston, Texas and New York, where the parent companies of Hess and Exxon grapple with the accounting equivalent of the three-card trick outside of Demico House.