We do not have to be ‘oil experts’ to understand this type of banditry!

Feb 11, 2018 Letters

Dear Editor,

The fact that the ExxonMobil deal stinks to the high heavens has catapulted some government officials and a former Natural Resource Ministers from the past Government on the defensive mode by making ridiculously flawed statements to the effect that ‘everyone has now become experts on oil’.
I want to make it clear to the self-proclaimed oil experts that you do not have to be an ‘oil expert’ to appreciate the fact that the ‘Exxon contract’ is negatively skewed in favor of the oil Companies. We do not have to be ‘oil experts’ to discern the many instances where we stand to lose and where our future generations stand to lose. This Government has now confirmed our destiny as a poverty stricken country. Our people will continue to run to other countries like beggars trying their utmost to eke out a living and where they will continue to live as last class citizens in perpetual fear of deportation.
Moreover, we do not have to be ‘oil experts’ to appreciate the fact that other countries have gotten far better deals for their oil and that Exxon had tried on many instances to rob some poor nations who have demanded that the Exxon Contract be renegotiated and were successful.
As a non-expert in oil, we do understand that we are contracted to pay a hefty unaudited US$460 million cost recovery with an endless list of cost recoveries that will deplete the revenue by 75 percent , then after deducting operating costs the profit oil is available for the 50:50 split, we pay all interest on ‘pre contract’ loans taken by Exxon, our royalty is a paltry 2 percent, our signing bonus is a beggarly US $18 compared to other countries, there is no ring fencing which means the cost recovery can be inflated, we gave incomparable tax concessions (VAT and duties), no corporation tax and we pay the income taxes for Exxon, more than 250 classes of uncapped items imported will not be inspected by GRA, we pay all litigation fees, we pay for donations made by Exxon, there is no provision for any adverse effects on fishing grounds, coastal communities or neighbouring countries, provisions for oil spill are yet to be seen, Exxon dictating the responsibilities of the subject Minister, the Minister must give a 7 day notice if he wants to visit the Site, the unconstitutional ‘Stability of Agreement’ clause, and the list goes on. We do not have to be ‘oil experts’ to understand this type of banditry!
In addition, Annex C is evidence that we are not going to get any reprieve from the operational costs as well. There are many items of expenditures which are disallowed in other countries which are allowed in this Exxon contract. This again will put a serious dent on the oil profit available for splitting. Even the crumbs will be fewer. When this is looked at in the light of our inability to accurately audit these costs we will then appreciate our serious debilitative condition. The IMF has even urged the Government to commence the auditing of all exploration and development costs by ExxonMobil and it was pointed out that GRA has limited skills to this type of audit. Despite this GRA is now doing this audit. Indonesia had 600 persons involved in the verification of cost recovery claims by Exxon and they failed. Tanzania also had a problem with verifying cost oil. Will GRA be able to do that?
Oil production is projected to begin in 2020 and the Government has failed to put specific measure in place to ensure that cost recovery claims can be authenticated. Our future benefits from oil seems bleak.
In July 2016, Minister Trotman had said that Guyana will be dictating its own terms and conditions for the companies which are drilling for oil and was adamant that no one was dictating for the Government. Unfortunately, soon after he said this he became signatory to the worst lopsided oil contract this world has ever seen! A contract which has become an affront to all Guyanese, one which was negotiated by a Harvard trained negotiator and his band of ‘oil experts’. All Guyanese should call on the Government to renegotiate this contract which is the mother of all the worse contracts ever signed by any government at any time.
From all indications, Exxon has all the trappings of a state within a state! This new State has a name: Exxon Guyana!