While some of our politicians divide our people by inciting racial riots, Exxon is laughing all the way to the bank, wallowing in enormous profits from the first oil well called Liza 1 in Guyana. Exxon is seeking approval for a new oil well called Payara in the Payara oil block. Despite all the experts advising that Guyana should use the approval of the new Payara oil well as an opportunity to leverage a better deal with Exxon going forward, in a recent press conference, the Guyana government through its chief spokesperson, Vice President (VP) Mr. Jagdeo, said the Payara approval is not a “make or break” moment for Guyana.
True, it was the PNC’s Trotman that rushed to sign a very bad agreement, rejecting advice given by its advisory team. The PPP must not rush down that same road repeating the PNC’s mistake and rejecting good advice given by many, including our indomitable major newspapers, and the Oil and Gas Governance Network (OGGN) comprised mainly of Guyanese living abroad.
It is important that the Government’s position indicates that the Government will not just follow the beat of its own drum, and not listen to anyone else. During a recent press conference, Mr. Jagdeo said while Exxon and the Government of Guyana do not see eye to eye on issues related to the Payara license. “…I don’t see this and the government doesn’t see this Payara as the make-or-break,” he said. If we don’t renegotiate now, when? After we rush into another bad deal? We need to maximize our benefits from each and all of our wells.
The VP said, “we don’t favour flaring. We’re opposed to flaring. And secondly, we believe that any water discharged, whether reinjected or discharged must be treated to international standards… But these are generic positions. We see this as a continuum. Exxon is not gonna disappear tomorrow. The Payara license is not the only opportunity that we have to get what the President said we wanted and what the PPP campaigned on, which is an industry that benefits the investor but significantly, benefits Guyanese, our people through jobs, business opportunities, etc…There are numerous opportunities in this continuum.” The VP said there will come a time when the government will hold discussions about local content and related legislation. He said there would be another negotiating opportunity when talks are held about the development of gas fields, the price for gas, how much of it comes onshore, and how it will benefit the people, and that the government is eager to engage in a discourse on training opportunities for locals.
Nation, understand this – the biggest benefits from oil come from the royalty, the profit sharing, Exxon paying taxes (they don’t pay taxes now), and efficiently auditing the costs submitted by Exxon to make sure we are not getting robbed of $US billions through inflated expenses reports. These are the high-end items if there is a continuum. The local content is important but that’s not where the biggest gains come from, and is not a substitute for better royalties or profit share. The biggest beneficiaries from a better local content policy would be the middlemen businesses, not the poor people of Guyana. The trickle-down effect from local content is not as huge as if we were to renegotiate for a better royalty, profit share, requiring Exxon to pay taxes in keeping with our tax laws, or pay for all oil spills. For every 1% increase in royalty, at US$50 per barrel, we stand to gain an estimated US$4 billion. That’s more than you can get on a better local content policy. (Local content refers to Guyana companies getting some of the oil related contracts for goods and services, and Guyanese getting oil jobs and training).
The government must understand that getting the maximum benefits for our poor, destitute people, is not a multiple-choice question where the answer is A, B, C, or D. The answer is “E”, “all of the above.” This notion of a “continuum” seems to be an inappropriate answer to the call for renegotiation. We urge the Government to commit unwaveringly and unequivocally to renegotiation that includes: higher royalties; higher profit share; Exxon paying taxes (and amendment or removal of the stability clause); efficient auditing of oil expenses claimed by Exxon; clear agreements that Exxon pays for oil spills not recoverable from our profit share; strict penalties for flaring, oil spills and release of polluted water; better local content; etc.
Nation, I ask you to “Speak now or forever hold your peace.” Speak up now and let’s back the legally elected government as it stands up to Exxon for the people of Guyana. As I said before, if the contract is renegotiated or not, the political and business elite will still live large and have the good life. The rich will get richer, and the poor will get poorer. Please sign the Oil and Gas Governance Network (www.oggn.com) petition now, calling for renegotiation of the Exxon contracts. Go to https://www.change.org/Guyana_oil_contracts_need_renegotiation
Sincerely,
Dr. Jerry Jailall