MOU signed by Halliburton & University of Guyana at GIPEX 2019

The Faculty of Engineering and Technology of the University of Guyana (UG) will benefit from major developments with a G$459M investment by American multinational corporation – Halliburton.

The Memorandum of Understanding (MOU) providing laboratory equipment, staff development and software to the department was signed at the Georgetown Marriot hotel, on the sidelines of the second GIPEX forum.

Halliburton is one of the world’s largest oil field service companies that has operations in more than 70 countries. It owns hundreds of subsidiaries, affiliates, branches, brands, and divisions worldwide and employs approximately 55,000 people.

Dr Bynoe said the move is a tangible demonstration of how companies can assist Guyana in building its capacity to address the emerging oil and gas sector.

“We are grateful for this investment in our human capital, and we do believe, as we continue to grapple with conversations on local content, enhancing capacities and ensuring that Guyana obtains a substantial portion of the oil revenue. It is not just about monies earned. We are encouraged by this and ask other companies to follow.”

Halliburton’s Caribbean Area Manager, Franco Delano said the company intends to transfer technological knowledge with Guyana. Halliburton is committed to developing locals here.

UG’s Vice-Chancellor Professor Edward Greene said he was thankful for the Department of Energy’s GIPEX conference. issues raised at the forum provided him with an understanding of the role the university must play, as it moves forward to achieving new goals for sustainable development for Guyana. The University of Guyana Council appointed the former diplomat of the Caribbean Community (CARICOM) and the United Nations (UN) as its next Chancellor. He was inducted at a ceremony during convocation at the Turkeyen Campus. He succeeds Guyanese Professor, Nigel Harris, a Vice Chancellor of the University of the West Indies (UWI).

Greene, a past student of Queen’s College. is a former Assistant Secretary General of Human and Social Development of the 15-nation CARICOM from 2001 to 2010 and UN Secretary-General’s Special Envoy for HIV/AIDS in the Caribbean from 2012 to 2017. He was the Chief Executive Officer of Global Frontier Advisory and Development Services (GOFAD), a think-tank. The former Senior Adviser of Public Policy, Health and Human Development at the Pan American/ World Health Organisation held leadership roles in regional and international portfolios.

The University of Guyana also named David Lammy as the university’s first Envoy Extraordinaire at UG Council meeting. He studied law at the School of Oriental and African Studies in London University. He earned an LL.M from Harvard Law School. Born to Guyanese parents, he entered the British Parliament in 2000. He served as Parliamentary Under-Secretary of State for Innovation, Universities and Skills and later as Minister of State for Innovation, Universities and Skills. He maintains active interests in Guyana.

Guyana to repay its single largest debt in history ($10B) in two years

Financial returns from Stabroek Block post-2022 will be eagerly awaited by 30 per cent stakeholder , Hess Corporation, expecting a healthy return on its cash flows.

Holders of the Stabroek block hope to collect over $10B from Guyana in the course of two years, in order to pay off for the Liza 1 and 2 field developments, including the cost of two Floating, Production, Storage and Offloading (FPSO) vessels.

Chief Executive Officer (CEO) John Hess confirmed this during the recent 2019 Global Energy Conference in Miami, Florida.

Hess was addressing changes in the company’s proposed investments in the coming years.  He told the conference any upward revision to the projected Capital Expenditure for Hess Corporation would be had from 2022, at which point the company will begin seeing positive returns on investment in Guyana.

Once the second ship comes on in 2022 and in Guyana, Hess will be producing over 100,000 barrels a day which will recoup “all our cost from first ship and second ship”

He told investors that the company is looking at 2022 and beyond as the time when the company will be generating significant free cash flow.  Lauding the decision by Hess’ Board of Directors, he pointed out that the investment in Guyana was made at a time when industry leaders were not investing in the offshore sector.

Hess managed to purchase a 30 per cent stake in ExxonMobil’s Stabroek Block for US$30M and has since seen the discovery of over six billion barrels of oil.  Investments in the Permian did not give the desired returns that the company was seeking and blocks were being returned in the Gulf of Mexico.

Hess said “we looked at the Permian and were all about returns and we looked at where the return would be best.”

He explained that companies had been paying as much as US$40,000 for an acre which could only give a 10 per cent return on the investment, calculated at a price of US$60 a barrel.

Offshore opportunities were being deserted.
He said the company was looking to secure substantial growth not only in production but in cash flow, which it achieved in Guyana.  Speaking to upward changes in the Capital Expenditure plans for the company, he said that this will be determined by the post-2022 returns.

Hess divulged that the company, with its Guyana investment is looking to see a 10 per cent growth in production while receiving a 20 per cent growth in cash flow returns.

This is a unique value position that has a rate of change that is competitive anywhere, “The best rocks for best returns…at end of the day we are on track for that.”

Hess is looking at a $3B a year investment primarily in its operations in the Bakken and Guyana, an outlook that will change come 2022 when the company expects a surge in cash flow as a result of the recouping of investments in the first two field developments.

Guyana’s oil future is plainly of global business importance

by John Mair

“I shall be more prolix than usual as the subject merits it; Guyana’s oil future.”           It was the subject of a well-attended public seminar at the Cass Business School in the City of London organised in conjunction with the Guyana High Commission.

Some interesting new lines emerged from what was a fairly formal static ‘discussion’.

1. 1.  Total is now fully operational in Guyana. They have bought into interests in three fields offshore Guyana. The country manager Olivier Wattez hinted that they might have a significant announcement about the Kanuku field before Xmas.
   2.  Many speakers assumed that ‘first oil’ would happen in the Stabroek field pre-Xmas.
   3.  Francis Kiernan of Abis Energy produced some rather interesting charts based on ExxonMobil information that big money would be invested up to 2025 but payback would begin as soon as 2028, return on capital would come within five years, peak production from the Stabroek field would be close to a million barrels a day in 2027, gas production could also peak in 2027/28.  In plain English, the Stabroek field is a gold mine for ExxonMobil. They invest heavily up front but rewards come soon, maybe sooner than normal.
   4.  High Commissioner Case announced the government was working on a series of strategies to use their share of the oil money. One of them might involve using some of it to consider moving the administrative capital inland – close to the Linden-Soesdyke Highway – to get away from the dangers of climate change and flooding on the coastal belt.
   5.  The Head of the Department of Energy Dr Mark Bynoe also appeared by Skype but by and large stuck to his public pronouncements to date. He did not take audience questions.

The audience – members of the diaspora and business students at Cass and elsewhere – looked interested even if they were not able to engage fully.

Guyana’s oil future is plainly of global business importance.

RUSAL is Guyana’s largest private fuel retailer

  Source:   Kaieteur News

The Guyana Revenue Authority (GRA) is investigating the Russian owned Bauxite Company of Guyana Inc. (BCGI/RUSAL) about the resale of the fuel, which it imports. Independent investigations revealed that the company has been in the business of fuel sales from its inception. RUSAL has been granted a waiver of duties as part of an incentive for its investment in Guyana.

This means that the tax normally paid to the government on the importation or purchase of the fuel is not being paid by RUSAL.
The company in turn retails the gasoline and diesel, which it does not pay taxes on.
Compounding matters is the fact that in addition to private individuals and employees of the company, as some of its customers, several large-scale businesses are also in cahoots with RUSAL.
These include Minequip Corporation, Oldendorff Carriers—the company it has contracted to ship its bauxite out of the Berbice River—Universal Contracting Services Limited, MACORP, R. Jaisingh Transportation and Reliable Industries, among other companies and private individuals.

RUSAL has kept detailed records of its fuel sales. These records  document monthly sale to the entities, the quantities, amounts paid, addresses and invoice numbers for the transactions  and  demonstrate that the company in January 2015 sold $25M dollars worth in fuel.  Sales continued monthly at varying amounts $5M in February, $4M in April escalating to $14M by June, $16M by October, $14.2M the following month and closing the year with $11M in December.

This trend continues at an average of about $15M monthly, the following year and has continued at the same base average in ensuing years.  This means that RUSAL has sold just about $1B dollars in fuel at market price—fuel that it had imported or purchased duty-free for its bauxite operations.

Previous investigations had found that RUSAL’s operation had cost Guyanese more than US$100M so far, in fuel alone, that was imported and duties not paid.  This would mean that the foregone taxes are in fact additional profits that RUSAL makes on top of the fuel it resells that it had imported duty-free.

The company has never paid any dividends to its 10 percent partner, the Guyana Government.   Investigations had found that the company ‘uses’ daily, an average of 18,350 gallons of diesel fuel  which equates to 6.7 million gallons each year.

The net effect is that the company in the past two and a half decades of its operations in Guyana, used an estimated 94 million gallons of diesel fuel.

US Refineries between 2005 and this year, sold diesel wholesale at an average of between US$1.50 and US$2.25 per gallon, sometimes reaching as high as US$3.90 in mid 2008.  Using a conservative mean of US$2.00, this means that the company would have purchased US$188M in duty-free fuel. The government waived the fuel tax or US$94M.

According to the pact inked between the parties in the 2005 Fiscal Incentives Agreement, RUSAL shall also be exempted from the payment of withholding tax on interest, dividends and lease payments to its affiliates.  The company has also been exempted from payment of all and any duties and taxes on equipment, machinery, motor vehicles and supplies.