More concerns over ExxonMobil

Feb 19, 2018 Features / Columnists, Peeping Tom

Concerns are being expressed over the agreement which the government of Ghana (not Guyana) has signed with ExxonMobil. That agreement provides for a 10% royalty. Yet it is being criticized as the worst deal possible for the people of Ghana.
Guyana got a 2% royalty in its agreement with ExxonMobil. Despite this, Guyanese are being advised to stop fretting about an agreement which will bring an average of US$1 M per day to the country. This will work out to each Guyanese receiving G$80,000 per year, a sum which cannot even buy the latest Samsung Model phone.
We are told to stop fretting since we have to accept the way that international business is conducted and how investment decisions are made by big corporations. In other words, Guyana is a ‘taker’ and it has to accept whatever ExxonMobil wants it to have. If that is the basis upon which countries negotiate with foreign firms, then almost every country which negotiates with big companies will be shafted.
ExxonMobil came here under an agreement which it signed with the PPP/C government. Guyana did not know at the time that it had oil and therefore it signed an agreement which reflected its quest for exploratory investments.
ExxonMobil is the one who when oil was found approached for a renegotiation. And what did the APNU+AFC do? Instead of using that opportunity to strike a fair deal for Guyana, it signed what can only be described as a give-away agreement.
The fact of the matter is that other countries have signed deals which have yielded higher royalties. However, the APNU+AFC administration is asking critics not to nitpick the agreement but to look at the overall benefits which is 2% royalty and a 50-50 production sharing split.
The bottom line is that that agreement will yield an amount which on a per capita basis will not allow Guyanese to buy a good smart phone each year. That is not a lot of money as Guyanese have been led to believe.
The argument is accepted that if ExxonMobil had not found oil they would have to shoulder the cost of their operations, with no burden to Guyana. But is that not why the royalty negotiated was 1% – because oil was not discovered?
But when oil was found, the company is asking Guyana to shoulder 50% of cost recovery. Now that Guyana is bearing cost recovery, why should the royalty rates not be consistent with international practice?
The 2016 deal is not sealed. It must be renegotiated. ExxonMobil signed an agreement in 1999. It did not strike gold until 2015. What was it doing with the blocks which it was handed by the Janet Jagan administration between 1990 and 2015?
ExxonMobil was the one which wanted a new agreement. Guyana had a chance to get a fair deal. It squandered that opportunity. It has forfeited the future of Guyanese.
There is no value-added under this agreement. This is a raw resource exploitation agreement. ExxonMobil will drill our oil and take it out to be processed elsewhere.
Guyanese will get crumbs under the present agreement. The monies earned are insufficient to transform the local economy. This is why some persons are suggesting that the government not use oil revenues to pay cash grants to its citizens. They know if this is done, Guyanese will realize the sell-out which has taken place because the check in the mail will end up being less than $G8000 per month based on earnings, as stated by the government, of US$1 M per day.
Guyanese must not be lulled into believing that the agreement with ExxonMobil is not re-negotiable. The agreement is a contract and contracts can be re-negotiated. No multinational wants to work in a country where the government or its people are at odds over the agreement.
Guyanese do not have to accept this flawed agreement. Exxon asked for a renegotiated agreement and got it. Guyana can and must do the same.

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