My column…That oil contract may be rooted in history

Feb 11, 2018 Features / Columnists, My Column

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Most of the conversation these days centres on the oil contract. This contract was made public in December after calls by the society. And from the time the contract was released, people began to pick holes in it.
And indeed there are flaws that seem to be to Guyana’s disadvantage. Critics began to pick at these flaws. Now there are calls for the oil company to revisit the contract and make things a bit more meaningful and profitable for Guyana.
However, there is a school of thought that Guyana is getting more than it would have got had the oil company not undertaken the exploration. This seems to be a case of half a loaf is better than none. But this argument does not hold water in some quarters.
This caused one commentator to recall the attempt by Union Carbide to mine manganese in Guyana’s northwest region. Manganese is an import mineral that is in demand on the world market. There were the negotiations with the Burnham administration.
Burnham insisted on more than Union Carbide was prepared to offer, because he felt that the ore was Guyana’s and the country should get maximum benefit. Union Carbide said that it was not prepared to go better than it was offering, and picked up its equipment. It left for Ghana and Guyana was allowed to keep its manganese.
We know that to this day the manganese is there and Guyana was no better off. It has its manganese that it can do nothing with. That was about fifty years ago, but in that time Guyana was forced to rely on more foreign aid and could not pay the kind of wages that it should.
We come to the oil situation. ExxonMobil came in the 1990s and after negotiations, got concessions offshore. Between 1999 and 2002, ExxonMobil began to explore. From then to 2015, there was the exploration until the discovery. All this while Guyana was silent, probably because it was unaware, or because it had given hope of finding oil. Many companies had been exploring, but they all came up empty.
Janet Jagan had given the oil company 600 blocks instead of the sixty, but no one said anything then. The announcement of oil came in 2015 and suddenly Guyana began to focus. The 600 blocks that Janet Jagan gave to the oil company became a focus. The critics now wanted the present administration to correct this breach of the regulations.
Guyana began to get some money from the oil company, but the critics said that it was not getting enough. People began to look at what others got at the same stage and contended that Guyana should be getting the same. This continues to be the cry to this day. Talk about half of a loaf being better than none is not holding water.
When I talk to people about ExxonMobil packing up and leaving, they all say that the oil company would not leave because it has spent a lot of money. And besides, it has found one of the largest oil deposits in the world.
Meanwhile the price of oil is not what it used to be. At the same time, the United States has reopened production and is shipping large volumes of shale oil to countries like China, India and even some small countries. This is having an impact on global production and ExxonMobil is monitoring this situation. It is now left for us to see whether this oil company would find its operations in Guyana unproductive.
If anything, Minister Raphael Trotman is perhaps the most criticized. He has explained repeatedly that having looked at the existing conditions Guyana did the best it could. There is the Venezuela threat that kept away many oil explorers. ExxonMobil faced this challenge. This is being done, but in the event of anything, Guyana would have to bear the cost.
One argument is that if one is prepared to take the chance, then one is doing so at one’s own risk. If one succeeds that, one enjoys the fruits of one’s labour.
Where does this leave Guyana? I could see a future without oil and Guyana remaining poor. Yet this does not mean that Guyana must bend over backwards. However, there are Guyanese who are actually happy with the situation. These are the local businesses. They are already beginning to capitalize on what is on offer.
Some have already built stockyards. Others are securing transportation contracts, so for them, the bigger picture is not important. They are the believers in the half a loaf policy.
The question at this time is what the effect of the criticism on ExxonMobil is. This oil company is bigger than most governments, so the criticisms from some people in a backwater country would merely irritate, but will not hurt. Yet public opinion has been known to have an impact on everything. Public opinion is that there should be a review of aspects of the contract.
It goes without saying that ExxonMobil will make a killing. At the same time, Guyana is going to get more money than it would have got from any source. I can see Guyana not having to rely on foreign aid and donations.
To add to the benefits of the country is the agriculture production. Trinidad is in dire straits because the bottom is falling from its once booming oil economy. People are being laid off from the sector to such an extent that crime is climbing.
There is nothing to fall back on, so when the country could have imported all that it needed, the time is now that there is simply not enough money. Guyana has a vibrant agriculture sector that must be enhanced with whatever money is coming from oil.
The world knows that Guyana is going to be rich, even with this flawed contract. I can see many people flocking to this country, because people always follow opportunities. Other oil companies are coming, because they know that they too can cash in on the bonanza.
Minister Trotman is assuring that the other oil contracts would not be as lopsided as the ExxonMobil contract. So the promise is that Guyana would eventually get what it deserves, but the critics in the society want that bit more that they say is available and due to the people of the country.

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