Chinese Stabroek Block partner takes over US$2B in loans to stay in Guyana
Chinese Stabroek Block partner takes over US$2B in loans to stay in Guyana
…also secures infinite access to cash to explore, develop
Kaieteur News – China National Offshore Oil Company (CNOOC) International Limited (BVI) registered in Barbados, is the parent company of the Chinese partner with a 25 percent working interest in the Stabroek Block and, according to financial records, the company has loaned to its Guyana affiliate in excess of US$2B in order to finance its share of expenses in the operation.
This includes exploration and development and other ancillary costs associated with the oil fields in the amounts relative to its working interests.
CNOOC Petroleum Guyana Limited—Guyana Branch, is the local subsidiary with which the Esso Exploration and Production Guyana Limited (EEPGL)—ExxonMobil Guyana—has a partnership with.
According to the notes to the financial statements for the period ending last year, it was noted that the Barbados based parent company initially provided the Guyana Branch with a US$2.7B credit facility and that this was increased to US$3.5B in July last year.
According to the financial statement, the credit facility is perpetual. Meaning, the company essentially has infinite access to the cash, to collect when needed.
Additionally, the credit facility is non-interest bearing, unsecured and with payment on demand.
With this in mind, the documents illustrate that at the end of last year just over US$2.4B had been taken. At the end of the previous year that facility had reflected that just US$2B had been taken, meaning the Guyana branch last year collected some US$400M.
It was noted too that the international company has provided its financial support to the operation of the company.
As it relates to the company’s capital structure, CNOOC indicated that this is comprised of share capital and debt, and a US$3.5B credit facility provided by the parent company CNOOC International Limited.
According to CNOOC Guyana Branch, “the company manages its capital structure to ensure that it will be able to continue as a going concern and have the financial capacity, liquidity and flexibility to find the exploration and development efforts in Guyana through the Branch.”
Additionally, the company has since been notified by its parent company that it will sustain the business at its current level of activities.
This publication had recently reported that EEPGL—the Operator of the Stabroek Block, is in fact not a Guyanese company.
In fact, that company is registered in the Bahamas with ExxonMobil Global Holding Investment B.V. being the 100 percent owner of that company.
That being the case, its branch—EEPGL/ExxonMobil Guyana—locally, is expected to make annual payments to its home office, amounting to hundreds of millions of dollars each year, as is outlined in the company’s most recent filings of its financial records.
According to those documents, an amount of G$847,407,889 was due to be paid at the end of last year, while the previous year’s operations saw G$1,326,315,642.
According to the accompanying notes to EEPGL accounts, “parties are considered related if (a) one party has the ability to control the other party or exercise significant influence over the other party in making financial or operation decisions or (b) the party is a member of key management personnel.”
As such, the payments identified in the financial report represent amounts due to the Home Office and are considered related party balances.
The payment is but one of the expenses being deducted from oil sold from the Stabroek Block that has been earmarked for repayments or to be recovered.
Under the Production Sharing Agreement, up to 75 percent of the oil produced in the Stabroek Block can be earmarked to be used for deductions.
Other costs being recovered and paid for using ‘cost oil’ includes, decommissioning fees, Exploration and Production costs, leases and loans, among others.
