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The end of the 2020 oil dream

Dec 11, 2017 Features / Columnists, Peeping Tom

Why would the government hide, from the public, that there was a ‘signing bonus’ with Exxon Mobil? Why was it necessary to conceal and deny this fact?
The government renegotiated the contract that the PPP had signed with Exxon Mobil. As part of that renegotiation, there was an agreement for a ‘signing bonus.’
The public was told that the contract was renegotiated but the renegotiated contract could not have been made public based on legal advice. No reason was given as to why this legal advice was given and why it was accepted by the government.
The government did eventually concede that it had settled for a two percent royalties and 50 percent production sharing. But it still refused to budge on making the contract public. Was the reason because it wanted to hide the bonus?
Christopher Ram revealed that he was told that there was a ‘signing bonus’. The government neither confirmed nor denied. It dodged the issue. It later denied that there was any agreement on a ‘signing bonus’, suggesting it was the figment of someone’s imagination.
Now we are learning the truth. There was indeed a ‘signing bonus’. A special account was being created in the Bank of Guyana to hold the ‘signing bonus]. This was over one year ago.
When it was suggested by Demerara Waves that the signing bonus was to pay legal fees related to the territorial controversy between Guyana and Venezuela, there was stout denial from the government. Now there is admission that the signing bonus was really to pay Guyana’s legal fees. So why all this deception?
The monies were never paid into the Consolidated Fund. Christopher Ram says that he has done a detailed search of the Estimates for 2017 and 2018 and cannot find the money. So why is the government trying to hide this signing bonus from the public?
What was the government planning to do with money that would cause it to not want to have it accounted for in the Estimates or to admit to its existence?
The government’s actions will now cause persons to believe that there may be more monies which are hidden and not made public. There must now be a special investigation launched by the Auditor General into this fiasco which has serious implications for Guyana.
If it turns out that the bonus is designated for legal fees, then it means that Exxon Mobil would have had to agree to the payment of those fees. It means that, contrary to what most Guyanese believe, Exxon Mobil is tying its risks to the resolution of this controversy. It means that Exxon is not likely to go ahead with the any oil exploration unless the matter with Venezuela goes to the ICJ.
The matter is not likely to go to the ICJ anytime soon, judging from recent developments.   What this means is that the 2020 oil dream is over. All along people felt that Exxon would simply go ahead and drill for oil while regardless of the outcome of the UN good offices process. People felt that the United States would not allow Venezuela to get in the way of Exxon’s oil production.
Big companies, however, do not operate recklessly. They will not treat political risks lightly.  Multinationals asses these risks and it is this assessment which most likely would have pushed Exxon Mobil to agree payment of the signing bonus.
If the ‘signing bonus’ is indeed for legal fees, it means that Exxon is hitching its oil production plans to the controversy between Guyana and Venezuela being referred to the ICJ. We know that the controversy will not be referred to the ICJ anytime soon. Exxon Mobil therefore is not likely to meet its deadline for production of 2020.
Guyanese can therefore kiss the oil by 2020 dream goodbye. It will not happen. Perhaps this explains by the government was so deceptive about the signing bonus.

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