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Govt. takes oil revenue projections as gospel, while Exxon adds disclaimer – Jagdeo
Opposition Leader, Bharrat Jagdeo holds up an ExxonMobil advertisement that depicts revenue earnings for Government
Opposition Leader, Bharrat Jagdeo has highlighted that the government is talking up the oil and gas sector when even ExxonMobil is very careful about financial projections.
At a press conference last Thursday, Jagdeo held up an advertisement ExxonMobil posted via social media that depicted a chart showing government’s revenue earnings from phase one of oil production.
“ExxonMobil puts in a caution statement even on their own graph, yet our Government sells this as gospel,” Jagdeo stated.
In the fine print of the ExxonMobil ad, the company noted that ‘crude prices used for the graph reflect the International Monetary Fund (IMF)’s forecast as of February 26, 2016’.
Further, ExxonMobil points out that the cash flow profiles depicted in the chart represent a scenario for illustrative purposes only, which may be very different to actual cash flows from future developments.
The company urged that the figures be used with caution as ExxonMobil cannot make representations with respect to the information.
The Opposition Leader noted that the Government has nothing else to sell about the oil and gas sector other than revenue earnings.
“They have one thing to sell remaining, that is the hope for a better future with oil money, so magically in 2020 our lives will be transformed. We will all be wealthy. We wouldn’t have to work anymore, we will have free gas from the Government, and you wouldn’t have homeless anymore. The streets will be paved with gold. That is the promise they are telling all their supporters. Wait until 2020 when everything will be transformed,” Jagdeo pointed out.
He noted that the reality of the numbers do not support such conclusions.
“For those who believe this wild promise of APNU [A Partnership for National Unity] they will be sorely disappointed in the future if they buy into this. It is not going to be a magical kingdom as they are making it to be with these numbers,” Jagdeo noted.
Government revenue from oil has to take into account cost recovery claims from ExxonMobil. Exxon has already submitted a bill of $460M covering its pre-discovery phase of operations in Guyana.
Minister of Business, Dominic Gaskin at a recent private sector forum pointed out that the Government is expected to earn US$300M in revenues in the first year. In contrast, the Government earned this amount from the gold sector over an eight-year period, which is described as ‘chicken feed’.
Jagdeo stated that the Minister ignored the contributions of the gold sector over the years that go beyond revenue earnings for Government.
“He did not look at the impact of the gold mining sector on the lives of perhaps one hundred thousand people; that it provides income for them, provides taxes outside of the royalties that Government collects and the linkages that the gold mining sector provides for Guyana and other sectors. All of those things were not factored into his presentation…just to point out once again that all the Government thinks about is how much money it can collect in taxes,” Jagdeo stated.
Experts have made it clear that Guyana was robbed billions by accepting a 2% royalty when the coalition administration negotiated a new contract in 2016 with ExxonMobil and its partners. Some experts have pointed out that huge chunk of the earnings will go towards funding start up operations under cost recovery.
There have been repeated calls for Government to renegotiate the contract for a fairer deal. The Government has resisted those calls and decided to stick with the current contract.
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