There are countless flaws in the oil contracts between Guyana and the multinational companies. Guyana has been shafted (exploited or get very little) in the contracts with oil companies as reported so many times in KN.
It is reported in KN and the international media that oil companies have paid Brazil some US$2.2 billion for rights to explore for oil. If oil and or gas is found, Brazil will be given royalty not less than 12 percent (international average) plus equal profit sharing. Brazil will get a fair deal. Brazilian government will not pay costs associated with oil recovery and it will not pay the taxes on the profits earned by the companies.
Contrast that contract with the one between Guyana and oil companies signed by successive governments. Unlike Brazil, which is being paid by other countries for the right to explore, Guyana is paying companies to explore and recover oil and then sell it with Guyana getting a “lil thing” for blindly signing on to being exploited. It is clear that Guyana has been shafted by the multinationals and successive governments have played a role in this exploitation and abuse of Guyana’s resources. In the contracts, Guyana did not even secure the interests of local content— local workers and business community. The result is almost all the workers and supplies (inclusive of food) are coming from outside.
Guyana has to pay the oil companies to explore for oil – worse than what happened under colonial rule. Over US$3 billion in debt have been accrued already and billions more in debt expected for exploration and recovery of oil. Guyana gets less than two percent in royalties (it must pay expenses and costs out of the pittance of royalties) and must pay all taxes on profits earned by the companies. If there are oil spills or other disasters, Guyana must pay all costs associated with addressing them including cleaning up and compensation. This could cost Guyana additional billions in US dollars. This essentially means Guyana is paying oil companies to explore and recover Guyana oil for the companies to sell and make a profit. This is the contract that the government was advised to sign. Something smells fishy. Guyana gets very little benefits from oil exploration and recovery and the risks associated with the measures are very high. Guyana could very well find itself in bankruptcy for centuries to come or experience eternal debt.
The above exploitation and abuse are what successive governments have consigned to the nation. And still the people vote for them. The people like to be abused. They deserve the governments they get.
The government could have consulted with those of us who studied strategies of investments by multinationals for advice on how to counter them in order to avoid the pitfalls the country now finds itself and to reduce exploitative contracts. Up until now, the Coalition Government has not sought advice from those of us who studied local content policy and how to maximise benefits for Guyanese. It is still not too late to consult with Guyanese experts to rescue the bad contracts to increase royalties and profits to Guyana and to release Guyana from billions of dollars in compensation and to guarantee work and business to locals.
Yours truly
Vishnu Bisram