Every Man, Woman and Child in Guyana Must Become Oil-Minded – Column 141 – October 19, 2024
Introduction
The results of a recent survey on the 2016 Petroleum Agreement with ExxonMobil and partners reveal overwhelming public support for renegotiation, with serious concerns about key provisions of the Agreement. The survey, conducted by Ram & McRae using the Google Forms platform attracted 135 responses from a diverse group of respondents including professionals, academics, students and citizens, provides compelling evidence that the Government’s “sanctity of contract” position is at odds with public sentiment.
Key Findings
An overwhelming 94% of respondents believe the Government should seek to amend the current Petroleum Agreement, with only 6% either opposed or unsure. This stark statistic alone should give pause to those who continue to defend the status quo. The survey revealed that only 3.8% of respondents were satisfied with the existing provisions of the Agreement. The remaining 96.2% identified multiple areas requiring modification:
83.2% want the royalty rate revised
79.4% called for changes to tax payment arrangements 66.4% seek modifications to tax certificates
66.4% want the revenue guarantee revised
61.8% support ring-fencing provisions
Governance and Oversight
On the critical question of oversight, nearly half (49.6%) of respondents favour a fully independent Petroleum Commission, while 44.4% support a combination of government and independent oversight. Only a small minority supported exclusive political control, highlighting the public’s disfavour of the current arrangements under which Vice President Jagdeo reigns supreme to the exclusion of everyone else.
The survey also revealed deep concerns about the Natural Resource Fund’s withdrawal rules. A mere 9.8% consider the current withdrawal levels appropriate. Maybe respondents are alert to the fact that under a 2023 amendment to the Natural Resource Fund Act, almost the entire amount of the first US$2,000 Mn. from profit share and royalty can be withdrawn and spent – no questions asked. It is ironic that the beneficiaries of this profligacy are arguing that more ought to be left in the Fund as intergenerational savings.
Fairness and Profit-Sharing
When presented with actual data showing Guyana’s modest and mildly declining share of oil lifts (from 13.04% in 2020-21 to 11.97% in 2023), an overwhelming 87.8% of respondents rated the current profit-sharing arrangement as either “somewhat unfair” or “very unfair.” Only 3.1% considered it fair, providing a clear mandate for revision of these terms.
Obstacles to Change
Asked to give their views on what they consider the key obstacles to renegotiation, respondent cited as the principal reason identified as the top reasons the following:
lack of political will (80.3%) fear of potential economic repercussions (53%) diplomatic concerns (44.7%) Legal constraints 37.9%).
The reasonable inference to be drawn from “Legal Constraints” is a reference to the sanctity argument so warmly embraced by the Government in place of their commitment to “review and renegotiate”!
Public Awareness
A striking 86.5% of respondents believe there is insufficient public awareness about the Agreement’s specific provisions. This suggests that greater public education could further strengthen the case for renegotiation. It is however surprising for another reason: no day passes without a news article and more making adverse comments on the Agreement.
Article 31.2 and Path Forward
While 53% of respondents were aware of Article 31.2 of the Agreement which allows for amendments with contractor consent, 47.4% view the current silence on invoking this provision as a missed opportunity by the Government to seek and obtain better terms. The main factors contributing to this silence were identified as:
Lack of public awareness (72.5%)
Political reluctance to challenge powerful oil companies (62.6%) Inadequate technical capacity (35.9%)
Fear of damaging Guyana’s reputation (33.6%)
Conclusion
The survey results paint a clear picture: there is strong public support for renegotiating the 2016 Petroleum Agreement. The current “sanctity of contract” stance by the Government which had promised to renegotiate the Agreement appears increasingly untenable in the face of such overwhelming public sentiment for change. As one respondent noted, “The supremacy of Guyana’s Sovereign tax laws should be maintained. The contract broke one law to install another.”
The challenge which Guyana faces is to translate the strong and compelling public sentiment expressed in this survey into political action. Neither of the two major political parties has given Guyanese any reason to suggest that they are prepared to take decisive action to change this lopsided and penal arrangement. With general elections approaching in 2025, political parties would do well to heed these findings and recognise that the public’s patience with contemplating living with the 2016 Agreement beyond the middle of this decade is fast evaporating.
