Renegotiation

Feb 01, 2019 Letters

---

 

Dear Editor,

As promised, I now respond to Dr. Jan Mangal’s comments on the question of the Exxon contracts.
In 1999, Guyana entered an Agreement with ExxonMobil to search the seabed in our offshore areas in the hope that commercially viable quantities of oil would be found. The 1999 contract contemplated two stages of operation, prospecting and production.
The parties made financial and operational commitments and fixed timelines for exploration and for profit sharing after oil was discovered. In 2016, after the game changing announcement that oil had been found in commercial quantities, this Government negotiated and signed a second agreement with Exxon. The terms of that Agreement were kept secret.
In March 2017, shortly after that Agreement had been inked, Dr. Mangal, who had by then been appointed Adviser to Minister Trotman, with responsibility for Oil and Gas, spoke at Moray House and described the relationship between the oil producer and its host country as akin to a marriage. But a marriage, like a business deal, should be fair and mutually advantageous to both parties.
From inside the Ministry, Dr. Mangal must have known the contents of the new Agreement, and must have known that it certainly did not harbour a happy marriage. Even without that inside knowledge, Melinda Janki scoffed at the soothing noises coming from Dr. Mangal on behalf of the Government.
She stated in Stabroek News’ column on 15th March, 2017: ‘Oil production is a hardnosed affair. An oil producer wants as much money as possible. It will cut costs as much as it can get away with. It wants to pay as little as possible to the host country.’
The Government was then still resisting calls to make the 2016 Agreement public. Ms. Janki repeated that call. Eventually, the Government capitulated, a mundane act of transparency made under duress which Dr. Mangal nevertheless touted as ‘a bold move by President Granger’.
But when the contract was released, it was clear that Ms. Janki was right; the marriage honeymoon was soon over, and the incompetence of our negotiators fell front and centre in the public eye.
Dr. Mangal’s tenure in the Ministry could not last; his personal integrity and suggestions for transparency could only have been viewed as obstructionist in that enclave. Following his defenestration, he was able to openly join the chorus of criticism of the Government’s management of the Exxon issue, including the 2016 Agreement. He now asserts unequivocally that this second Agreement was poorly negotiated by unprepared and unqualified officials.
He says, ‘Guyana is losing US$2.6 Billion on the first project alone… and Guyana will be losing more on the second project…, and even more on the third and subsequent projects.’ It is clear from analyses and comments far and near that, he is correct, but it would have been far more useful if he had made the same observations in March 2017 at the Moray House seminar.
In advocating for renegotiation, Dr. Mangal distinguishes our experience from the Singapore reality by reiterating the incompetence of our negotiators and leaders: ‘Singapore did in fact honour investor contracts, these were likely to be fair contracts negotiated by qualified bureaucrats, and not the lamentable form witnessed in Guyana.’
Again, Dr. Mangal is (unfortunately belatedly) correct. As I pointed out, Lee Kuan Yew said to make good decisions and to stick by them; the first step is a well-made decision.
What Dr. Mangal does not advise is where Guyana will find leaders with integrity, expertise and knowledge. He makes all the right noises, talking about a ‘level playing field’, ‘operating in Guyana without having to bribe some government official’, no ‘shake downs’, but ‘an efficient, transparent and respected process to set up a business’ but he does not suggest a solution to this problem.
And Guyanese know the reality. When Dr. Mangal advocated for allocation of offshore blocks by a method of public auction, the Government insisted that it should have the discretion to sole source. When he recommended retaining some blocks for the future, this was also rejected.
Guyanese all remember the infamous signing bonus secretly paid to the Government and only became known when the Agreement was made public. So the enormous question remains, ‘How can Dr. Mangal blithely advocate for ‘renegotiation’ when the negotiators will likely be the same actors as before, and none of those negotiators appear to have changed their religion?’
This is the familiar reality which confronts all Guyanese, and which has confronted all Guyanese for fifty years. The same corrupt politicians who want to secretly single source, and who wanted to keep the Agreement secret, and who hide from transparency and serve self-interest above national interest continue to hold the reins of any renegotiation now proposed to be undertaken.
Therefore, the problem facing us is not solved in any respect by the simplistic statement made by Dr. Mangal that ‘the 1999 Exxon contract has already been re-negotiated in 2016, and it needs to be re-negotiated again.’
Who will do that renegotiation? Every Guyanese knows the answer! It will be the same folks who put us in this predicament in the first place.
Renegotiation is important once it can be done lawfully. But there is much more to be fixed before Guyana can confidently embark upon a renegotiation exercise. Perhaps Dr. Mangal would be willing to participate in a public discussion on the pros and cons of renegotiation, and what steps need to be taken first. Guyana would certainly benefit from his insights.

Timothy Jonas

---

---