A negotiation process that squandered our patrimony

Jul 05, 2019 Letters

DEAR EDITOR,

With ‘first oil’ due to flow in 2020, and oil ‘experts’ abound, Guyanese are still unsure of what exactly will flow to our national coffers. I took the time to do some research and would like to share the results with your readership.
Production is expected to be 120,000 barrels per day, the revenue earned from this annually at current world market price of $57 USD per barrel would be 120,000 X 57 =$6,840,000 X 365 =$2, 496,600,000 (Two Billion Four Hundred and Ninety Six Million six Hundred Thousand USD).
Before we take our share, operational costs must be subtracted, 10%, and cost recovery 65%, this amounts to $1,872,450,000 and the remainder $624,150,000 is then split evenly between the production company (ExxonMobil) and Guyana. During the cost recovery years, Guyana will be earning $312,075,000 USD per annum.
It follows that when the cost of the FPSO (Floating Production Storage and Offloading vessel) is paid off by 2023, Guyana would earn $1,123,470,000 USD per Annum, right? Not so fast! Because we do not have Liza 1 ‘ring fenced’ instead of reaping this massive increase in revenue, we will watch it flow to the payment of the next FPSO for Liza2.
This scenario will replicate with all the production for many years to come, there are three more FPSO’s to pay for at $4 billion a pop!
To be clear, Liza1 and 2 will be paying for Liza 3, Liza 1, 2, 3 will be paying for Yellowtail, etc. at some point it will all be caught up, all the wells will be functioning and we will be earning at our full potential right? No, as the fourth well comes into production, Liza 1 will be closing up, without us ever having the benefit of earning from it in billions, our peak earning would have been the same as year one, three hundred and twelve million.
I do hope this short synopsis shows clearly that even when we have three wells producing at full capacity, we (Guyana) will not be earning as much as what we should be from one well had there been ring fencing provisions.
Raphael Trotman and his negotiating team have squandered our patrimony, the Granger administration’s haste to approve the Production Sharing Agreement to prop up its failures in every other sector of the economy have cost us more than money; our very dignity has been lost; forever we may very well be regarded as a nation of jaguars led by jackasses.

Respectfully
Robin Singh

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