Worrying oil costs

Aug 02, 2021 Editorial

Kaieteur News – Three captions in KN’s edition of Sunday August 1 conveyed some of what is wrong about how the oil wealth of this country is managed at the political leadership level. The first was pipeline costs (“Norway’s 44 in gas pipeline costs US$3.8M per mile, Guyana’s 12in gas pipeline to cost US$4.7M per mile”).
The second highlighted fees (“Exxon parent company demand millions in fees from Guyana’s oil”). And the third was about actual costs (“Actual costs of Exxon’s projects, new discoveries, dry holes remain unknown -Int’l report”). Instead of asking what is going on, we simply say that we are in for it. Meaning, one monstrous rip-off after another by a great white shark of a company, the biggest, most predatory one in modern times.
The three stories were all about oil and costs. Shady costs, questionable costs, suspicious costs, and a barrage of millions in U.S. dollars in costs, most likely that will add up to many billions of such costs, whether totalled in American or Guyanese dollars. We are not just in for it on the receiving end, but the costs heaped upon us by Exxon are killing us. When netted out against the revenue streams that could be coming to us, we are staring at huge deficits at the bottomline level, when the accumulation of these costs is considered, and the passage of time factored into the overall picture.
Exxon seizes every opportunity to cheat this country by piling up all manner of costs, some highly likely not to pass standards of clean scrutiny and best accounting practices. This is a solid first explanation for the deliberately hazy, impenetrable barrel of molasses that was supposed to represent the company’s financials for parts of its Guyana operations. The financial wizards at Exxon have done this before with other countries, but never with this freedom and to this extent.
For here, Exxon’s wizards utilise every old costing trick, plus they manufacture new ones that are customised for the leaders in Guyana’s Government, since thy know that they will get away with all of their financial and billing tricks, without much of any resistance.
Now, we will be clear as to where we stand with these costs. It is our belief at this publication that some of these costs are a combination of heavily inflated ones, imaginary ones, tricky ones, borderline ones, and outright cheating ones. When we speak of borderline costs, we do not mean the numbers, which give every impression of being padded, but borderline in terms of the accounting gimmickries that are employed by Exxon. Some are right at the margins of what is acceptable.
There is full understanding for price differentials, and supplier markups, the significance of time, and the hosts of other variables that could be used as explanations to justify the enormous spread (gaps) in what we are charged versus what is the norm in the international marketplace.
The problem is, as we have noted just now, that the cost differentials are so wide, which means they are so unbearably expensive for us. It also means that these costs taken individually or together diminish the revenue flows coming to us, and dim our present and future prospects for the genuine prosperity that is due to every resident in this society (including the foreign born and illegal ones).
In the meantime, with every single one of these cost discoveries laid bare before Guyanese, a few other things become clearer. It is how Exxon’s profit line is heavily dependent on Guyana. It is why Exxon eases away from other global places of exploration and production, where it has stakes, and places much of its future on Guyana. And it is how Exxon’s shareholders and suppliers benefit richly off the backs of Guyanese, who get less and lesser from this oil of ours.
Further, this provides all the subtitles anyone could need, as to why America took the lead in muscling our political leaders around in the last elections, because its people stood to reap so much from the oil wealth of this country. Meanwhile, Guyanese are left hoping, while holding an emptier and emptier bag. Costs are just another aspect of this country’s continuing oil curses.

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