Dear Editor,
Reference is made to Dr. C.K Hunte’s letter in the Stabroek News edition of June 21, 2024, with the caption…”Bhagwandin misleads when he suggests that the NRF Report has disaggregated data for the EMGL, Hess and CNOOC”. Dr. Hunte contends that my answer is the usual “red herring”, in which I once again attempted to divert attention away from the real issues he raised in his letter (s) on the “shortage of royalty”. He goes onto argue that the data in the Natural Resources Fund NRF) report is not disaggregated for ExxonMobil Guyana (EMGL), HESS and CNOOC.
The term “red herring” means to “divert attention away from the real problem; misleading”. The problem at hand is that there is no problem. There is no diversion of attention; I am simply trying to help readers and Dr. Hunte to understand how to properly reconcile and analyze the publicly available data on the oil and gas sector. It’s very simple. But Dr. Hunte seems fiercely determined to complicate simple matters.
It would be remiss of me to not highlight that the issue of disaggregated data that is absent in the NRF report, according to Dr. Hunte, is an issue that he failed to raise in his previous letters. If the readers were to revisit his original letter in the Stabroek News edition of June 12, 2024, and his subsequent letter published in the Stabroek News edition of June 16, 2024, readers would find that on both occasions, Dr. Hunte’s concern were premised on the aggregated data. At no point did he illustrate in his “tables” disaggregation of the production data and revenues. So, who is diverting attention now by introducing a new dimension to the argument after I would have fully addressed his original concerns? Is this not a case of “red herring”? Dr. Hunte?
Furthermore, the absence of disaggregated data in the NRF report is totally irrelevant and inconsequential. The reason for this, again, is very simple.
Pursuant to Petroleum Agreement (2016), there is only one operator, whereby Article 2.2 (a) of the Petroleum Agreement states that—
“Esso shall be the Operator charged with conducting the day-to-day activities of the Contractor under this Agreement. No transfer of operatorship to another Party not comprising the Contractor shall take effect unless it has been approved by the Minister which approval shall not be unreasonably withheld. The Minister shall be notified of any change of operatorship to another party comprising the Contractor in writing”. The operator referred to herein is ExxonMobil Guyana.
Of note, the “Contractor” is comprised of EMGL, HESS and CNOOC (HESS and CNOOC being the Co-Venture partners). And as far as I am aware, there has been no change in operatorship among the parties that comprise the Contractor. Accordingly, for the reason stated above, there is no disaggregation of production data, revenue, royalty, and profit oil as per the NRF report. It is one operator.
With respect to the preparation of the financial statements, however, each party has to prepare their own financial statements in accordance with the joint-ownership structure of the operations. In other words, it is not a case where HESS, CNOOC and EMGL are operating their own FPSOs—in which case—each company would have been subjected to individual reporting. 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, with regard to the report that Dr. Hunte would like for me to prepare, that too is not necessary. The NRF report contains sufficient information for the public consumption, and in fact contains far greater details than those highlighted in Dr. Hunte’s “table”.
Sincerely,
Joel Bhagwandin
