Every Guyanese will lose $15M if oil deal remains as is – Global Witness

Feb 01, 2020 News

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Anti-corruption advocate Christopher Ram is demanding that Government publicly apologise to the Guyanese people for what he describes as “colossal mistakes” in its management of Guyana’s fledgling petroleum sector.
Ram said President David Granger should rethink his position on the ‘sanctity’ of the Stabroek Block license granted to ExxonMobil and its partners, and renegotiate the “improper” agreement which was signed under the “strangest of circumstances”.
“He has a duty to this country to show leadership, commonsense, strength, patriotism – a duty to restore… our patrimony which his Government meekly surrendered,” Ram wrote in a letter.
The lawyer’s call to the President is, this time, specifically prompted by the entrance of global anti-corruption non-governmental organization, Global Witness, into public discourse about the sector. The organization has set its sights on Guyana’s oil industry, as it is well established for its record of exposing corruption and fraudulent goings-on in extractive industries around the world. It has already issued a stern message to ExxonMobil.

The firm has urged Exxon, pursuant to a report it is set to publish soon, to renegotiate the controversial Stabroek Block Production Sharing Agreement (PSA), so that Guyana gets a fair deal.
The agreement has been widely criticised as lopsided and unfair. The media corps has reported copiously on the many aspects of the agreement which have been deemed in contravention with the law, lopsided and/or have loopholes that will cause billions of dollars in revenue losses for the Guyanese people. Several sections of the public have called for it to be renegotiated as well.
ExxonMobil has a 45 percent stake in the Stabroek license, for which it is the lead operator. Hess holds a 30 percent stake, while CNOOC holds the remaining 25 percent stake.
By the estimation of a firm Global Witness has consulted, Guyana is set to lose about US$55B over the 40-year life of the Stabroek license. That’s nearly US$1.4B per year.
Ram has calculated with OpenOil’s figures that every Guyanese would be losing over $15M if Government refuses to renegotiate the controversial agreement. That number doesn’t even include the 16th find that ExxonM

obil recently released.
“To put that figure into some context, it means that at the national minimum public service pay of G$70,000 per month, this Government has given away 222 months’ or roughly 18 years and six months’ worth of earnings for every single man, woman and child in Guyana,” Ram said.
In a letter to ExxonMobil’s local subsidiary, Esso Exploration and Production Guyana Limited (EEPGL), Investigator for Global Witness, Jonathan Gant, told the company’s Country Manager, Rod Henson, about the report. Gant indicated that it commissioned OpenOil, a Berlin-based firm that conducts financial analyses on natural resource assets. Global Witness intended for the firm to update its fiscal analysis of the Stabroek license.
Global Witness, in the January 29 letter stated that OpenOil used data from Rystad Energy and ExxonMobil’s public disclosures, along with an oil price of US$65/barrels for its analysis. The firm also assumed that the life of the license would see ExxonMobil producing the current estimated 7.9B barrels in proven reserves.
OpenOil reportedly found that Guyana will only get a 52 percent share of oil revenues, though Global Witness has noted that a 69 percent share is considered reasonable.

Global Witness noted that the International Monetary Fund (IMF) set the reasonable government take between 65 percent and 86 percent.
Guyana is set to get an estimated US$168B over the course of the license, instead of a reasonable US$223B, the NGO indicated. That amounts to a significant loss for Guyana, a difference of US$55B.
Global Witness noted the IMF saying in 2018 that Guyana’s oil licenses “enjoy royalty rates well below what is observed internationally”, and OpenOil saying in the same year that Stabroek yields relatively low government take by almost any standard.”
Categorically, the anti-corruption body stated that the terms of the license are ‘exploitative’ and ‘unjustifiably bad’.
“Exxon can afford for Guyana to get a better deal. If Guyana obtains a 69 percent share of Stabroek reserves, Exxon will still obtain a return on its investment of 18 percent under [the analysis’] assumptions…”
Global Witness has given ExxonMobil the opportunity to respond to the points it has made by January 30 (two days ago), and intends to consider including the gist of the oil major’s response in its report.
Kaieteur News reached out to ExxonMobil’s Public and Government Affairs Advisor Janelle Persaud, to determine whether the company had responded to the letter, since the afternoon of Thursday last. There has been no response.
On the government’s side, Foreign Minister turned Foreign Secretary, Carl Greenidge is reported to have criticised Global Witness, calling them “a set of jokers” even before the publication of its report. An online publication reported that Greenidge went to a New Amsterdam rally for the governing coalition just days ago, where he told supporters that the Global Witness report “will claim that this government has been managing its business improperly, corruptly, inefficiently” and that “billions of dollars have been lost to the poor”.
Greenidge reportedly cast aspersions on the integrity of Global Witness and the upcoming report by telling the crowd not to get diverted by “false news”, and by claiming that there are “people” trying to undermine the work of the governing coalition.
Opposition Leader Bharrat Jagdeo discussed Greenidge’s comments during a press conference at his Church street office last Thursday. The former President said that Greenidge must already have been privy to the contents of the report.
Ram made a similar comment: “Political strategists will be wondering whether Greenidge knew in advance about the announcement and more ominously, about the source of the information.”
He added that the answers the NGO’s questions could get would probably embarrass ExxonMobil and the Government, and that Greenidge’s “attack” might be a pre-emptive strike to prejudice public opinion against Global Witness. Ram described this as troubling, seeing as “ExxonMobil and the Government of Guyana might be consorting on matters prejudicial to Guyana’s interest”.
Minister of Natural Resources, Raphael Trotman, has committed a grave and embarrassing injustice to the Guyanese people, Ram said in his letter. And what compounds that mistake, the lawyer posited, is the “aloofness and detachment” that Granger has shown for the sector.

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