What is Guyana really getting from oil?

Jul 16, 2017 Features / Columnists, My Column

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The coming of oil has exposed Guyana’s underdevelopment. For one, it has no one with the academic or engineering skill to decipher what is happening at this time. For decades there has been exploration and on one occasion, oil actually came to the surface.
Hunt Oil was operating on shore in Guyana’s hinterland back in the 1970s. It struck oil that initially gushed to the surface at about 400 barrels per day but then that petered out and there was nothing more. But there was always the belief that Guyana had oil, given that the black gold has been found in all the countries surrounding it.
Then a couple of years ago, after intensive exploration, ExxonMobil announced that it had found a large deposit offshore. Immediately there was euphoria in Guyana; it was as if all the country’s problems had been solved. The news kept coming. There was indeed a huge deposit, perhaps the largest in this hemisphere.
From then there has been a mad scramble to capitalise. The education system was never geared for an oil economy, so there were no trained engineers. There were also no trained analysts. ExxonMobil placed the discovery at a few billion barrels, but now new experts are saying that the find is much larger. They base their opinion on the fact that often when companies make a prediction that prediction is off the mark by a lot.
This bit of information has sparked suspicions in certain quarters. Some would say that the volume of the find is deliberately under estimated for the benefit of the oil company making the discovery. However, this would be exposed once production begins. The country would actually see how much oil is coming to the surface.
But Guyana for its part needs to play catch up. It must begin to channel its education in the direction of oil. The University of Guyana must begin to train the engineers. At the same time, other sections of the community must begin fashioning their programmes to cater for oil.
Those on the rigs must eat, so agriculture production must be geared to provide for the rigs. The eating habits would be somewhat different from Guyanese so there would have to be the necessary adjustments. But at this time there is no indication of enhanced agricultural production.
No one has invested in storage, but some companies are seeking to invest in helicopters to shuttle between shore and the rig. Harbour and port facilities will need to be constructed, and again this is where local engineering talent should come to the fore.
But there are other aspects to the programme. ExxonMobil has developed the kind of reputation that no company wants. It has been accused of hurting the country in which it has found oil. In one case it was accused of withholding the taxes. In another it has been accused of corrupting the leaders.
Guyana is now being looked at in this light. ExxonMobil has a lot of money to pour around, and, at this time, given that the last government was enmeshed in corruption, there is the suspicion that some in this government are not beyond reproach.
ExxonMobil is not facing the local media to answer questions that need to be asked. For example, Guyanese are not clear about what the country will get. There is an agreement which says that the oil company will pay a two per cent royalty and offer the country fifty per cent of the profits. These profits would depend on the expenditure.
The oil company says that it is spending a lot, but there is no indication that the government can keep tabs on the expenditure. It is not clear whether the oil company provides a tab sheet of the expenditure to the government. Not so long ago, the company announced that it was preparing to spend some $800 million.
The government is going to be asked if it is aware of the amount of money being spent during this oil exploration phase because, in the end, the country must be in a position to determine whether it is getting a fair share of the profits.
For now, the government is not saying a lot. Perhaps there is not much it can say, since it does not have the necessary knowledge of a lot of what is going on. Yet opportunities should be provided for questions to be asked.
A few private non-governmental organisations have been holding sessions, trying to educate the population to what is going on, but most of what they say can only be speculation, based on what information they have been able to glean.
Even the opposition is not saying much, leaving the suspicious-minded to believe that some money has been spread around in the correct circles. Yet the general view is that no company in this global environment would risk anything untoward and create a scandal of monumental proportions.
Then again, ExxonMobil is a public shareholder company which is always under the scrutiny of the U.S. Securities and Exchange Commission. Perhaps this is enough for the government to believe that there are enough eyes to monitor what is going on.
The expert hired by the government has also not been around for any questions in this day when the buzz word is transparency. I am sure that the nation would like to know how he is going about his work. Has he been able to determine what is really going on?
I, for one, have no knowledge of what is going on, because I know nothing about oil and gas. I have heard that Guyana would get its share of the profit in oil, which it could chose to sell to ExxonMobil or refine for its own purposes.
At the end of a certain period there should be a balance sheet of the progress being made at this time, but then again, will I understand what I am seeing? I doubt it. Yet there are people in our midst who would be able to interpret the information for my benefit.
Two weeks ago, Minister Joseph Harmon said that Government has set up a team to spearhead all discussions and programmes in the oil sector. Perhaps the team has been provided with the wherewithal to appoint the necessary experts who would keep the team members informed.

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