Business Minister thinks Guyana got a “decent deal” with ExxonMobil …several int’l organizations, experts say otherwise

Mar 07, 2018 ExxonMobil, News

Business Minister, Dominic Gaskin

In spite of the innumerable exposés on the appalling flaws of the Guyana-ExxonMobil deal, Business Minister, Dominic Gaskin still feels that locals need to be positive; appreciative if you will, about the “goodies” therein.
According to him, Guyana actually got a “decent deal” from the American oil company.
The politician made this and other statements yesterday as he addressed an audience at an oil and gas seminar that was hosted by the Private Sector Commission. This one day event took place at the Duke Lodge Hotel in Kingston.
There, Gaskin addressed a number of “negative” comments he observed in the daily newspapers, one of which included that the Government is collecting “chicken feed”, given the contract it signed with ExxonMobil.
Gaskin, who is in total disagreement with such sentiments, expressed “the Government of Guyana will receive in the first year of oil production, two percent of the gross value and 50 percent of profit oil. Based on the production of 100,000 barrels per day, and at today’s oil price of about US$60 per barrel, this amounts to in excess of US$300M in government revenues in the first year. That’s not chicken feed.”
Additionally, Gaskin said that the Government will receive withholding taxes from payments made to overseas based sub-contractors.
The Minister also sought to draw a comparison between oil and what is earned from the gold industry. Gaskin commented that the last eight years have been the best years ever for gold production in Guyana, both in terms of the amount of gold produced, the gold exported, and also the value of royalties and taxes collected by government. Yet, Gaskin said that the government has collected just over US$300M in royalties and taxes from all the gold produced in Guyana over the last eight years.
The Business Minister said that in the first year of oil production, the Government will make about the same that it did in the last eight years of gold production. Again he said, “That can’t be chicken feed.”
By 2022, when the second phase of development starts to produce oil, Gaskin said that the Government revenues will increase to approximately US$800M per year.
The Business Minister stated, “…So for anyone to assert that our government is selling out and giving away our oil is just plain nonsense. Could we have gotten more? You can always get more. You can also get less.”
“But the fact remains that you can’t just start off with no industry and no proven reserves and want to play hard ball with investors who have years of experience in the field, and who can easily take their business elsewhere without any major consequences. I believe this is a decent deal…”
WHERE IGNORANCE IS BLISS
While Gaskin holds firm to his views, several international organizations and oil and gas experts have unanimously agreed that not only is the oil contract seriously flawed, but only serves the interest of one party—ExxonMobil.
In a report that was handed over to the government last year, the International Monetary Fund (IMF) in no uncertain terms pointed out that Guyana has on its hands, a contract that has several loopholes.
In this regard, the IMF noted that there were no provisions to properly address cost recovery bills that will be submitted by the company as well as provisions to guard against expenses that come with unsuccessful exploration.
The Government is still grappling with mechanisms to address the numerous flaws of the contract that Minister Gaskin deems to be a “decent deal.”