The dirty politics of oil

Jul 01, 2019 Features / Columnists, Peeping Tom

The government has an obligation to renegotiate all the oil blocks which were handed out – both those given out during the PPPC’s tenure in office and those which were distributed since May 2015. Indeed, the contracts themselves, by being standard for all investors, imply a need for post-exploration renegotiations.
Kaieteur News and Glenn Lall should be recommended for the Pulitzer Prize. No newspaper, anywhere in the world, has done what Kaieteur News has done: expose how the oil companies and oil speculators have ripped this country off.
Guyana is a case study on the dirty politics of oil. The APNU+AFC government was taken to the ‘cleaners’ by Exxon during the secretive negotiations for the renewal of its exploration and production sharing licences.
The outcome of those negotiations was lopsided in favour of the company, which now enjoys benefits, which make the laws of Guyana subordinate to the company’s interests. The low royalty and profit sharing and the high cost recovery demands are all stacked in favour of Exxon Mobil.
Kaieteur News has exposed another major defect. University of Houston Instructor, Tom Mitro, has described the work programmes incorporated within the contracts as “almost nothing” by industry standards.
He showed how the oil companies have Guyana by its ‘balls’. Mitro pointed that for a block the size of Stabroek – 6.6 million acres – Exxon and partners are only required to drill one exploration well every three to six years to justify extending the permit for ten years.
Describing this as a very minimal commitment by industry standards, he observed that for much smaller concessions, there is usually a requirement of at least one well every one to two years in order to maintain the licence.
Guyana has fared worse than most developing countries in its negotiations with the oil companies. As reported last week, an examination of agreements, which were signed by oil companies with Liberia and Ghana, show that the work commitments, in those contracts, far exceed what Guyana has allowed within the Stabroek Block.
The situation in the Canje Block is not any better. Under that agreement, the contractors are merely required, within the first 18 months, to undertake a mere 1500 line km of seismic studies. And in the next two and half years, to interpret a minimum of 500 square kilometres of 3D seismic to identify drilling targets and complete a geotechnical/pre-drilling survey.
These minimal standards render the relinquishment provisions within the contract a virtual nullity because it would not unduly tax the oil companies to undertake or even claim to have carried out these seismic studies.
The oil companies therefore can continue to hold on these blocks and to boost their asset and share values while doing very little. They can make good money without doing much.
These oil agreements are the worst agreements ever signed locally. Guyanese have to stop believing that oil riches are about to descend – not under these agreements.
When the faecal matter hits the fan next year, all those investments, which people are making in anticipation of a bonanza in oil will come crashing down. Guyana is only expected in the first year of oil production to gain about G$60B in revenues. And given the high cost recovery threshold of 75%, it may be lucky if its ends up with G$20B. What difference is that going to make to the lives of Guyanese?
We have these dreams before of the good life. When sugar prices were high in 1974 and 1975, Burnham used to boast how much higher they were than the world market prices. He went on a spending spree and expanded the size of the government. When oil prices spiked a few years later, all the sugar money went to pay for higher oil prices.
In the 1990s, Guyanese were again promised riches from gold. Omai Gold Minies was likened to King Solomon mines. The Canadians came, took our gold and we are still poor.
Oil is now being touted as the means to make Guyana the fastest growing economy in the world. It may well be. But with the agreements which we have signed, it will not ensure that growth translates to wealth.
Guyana should do what is being done in Trinidad and Tobago. It should renegotiate its oil contracts and it should ensure that the highest integrity in any renegotiations.
The politics of oil is dirty. Those who negotiate on Guyana’s behalf must come with clean hands and leave with clean hands.

Latest News

The dirty politics of oil

Related

Similar Articles

The Glenn Lall Show | December, 2nd, 2024

Follow on Tik Tok @Glennlall

THE BLUNT OF THE DAY

Sports

Annai Sec’ plummet to 6-2 defeat as Speyside topple Dolphin 3-1

Queen’s College captures 2024 Georgetown...

Rodrigues, Sadhu hand India big win on belter

Teams ready to rumble in the KFC Int’l Goodwill...

Georgetown Mayor Alfred Mentore launches City’s...

GGA looking to continue growth, following...

Features/Columnists

Exporters are being left to fend for themselves

Let the asylum seekers go: a first step for Venezuela to rebuild relations in the Americas

Guyana Police Force – 5000 finest

Publisher’s Note

Weekend Cartoon

Bridge Watch

Demerara Harbour Bridge

> Berbice Bridge […]

The dirty politics of oil

Share this:

Related

Similar Articles

The Glenn Lall Show | December, 2nd, 2024

Follow on Tik Tok @Glennlall

THE BLUNT OF THE DAY

Sports

Features/Columnists

Publisher’s Note

Weekend Cartoon

Bridge Watch

Demerara Harbour Bridge

> Berbice Bridge […]