‘Guyana witnessing an oil hustle’

Dec 13, 2021 News

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– throws away future generation’s wealth for fast cash – Dr. Thomas

Kaieteur News – Former Head of Transparency International Guyana Inc (TIGI), Dr. Troy Thomas is perturbed by the way in which Guyana’s oil industry is being handled, noting that instead of there being earnest efforts towards the protection of the nation’s patrimony, the citizenry is witnessing a “petroleum hustle.”
During a recent interview on Kaieteur Radio, for International Anti-corruption Day (December 9, 2021), Dr. Thomas, a University of Guyana Lecturer commented: “We did not consider intergenerational equity and intergenerational justice. We wanted some fast cash and we were willing to give away the wealth of future generations in order to get that fast cash and when you listen to the conversation and the justifications that people put forward even to this day, that’s what you’re getting…”

Dr. Thomas added, “We’re not thinking beyond or looking at what we can do in terms of infrastructure right now or looking at what we can do in terms of building this and that and the other. (We are) not recognising that whatever natural resources we have, belong to our Guyanese and even future Guyanese and if we think about it that way then we would want to step back and make sure we get things right.”
He alluded that the policy leaders of the day would want to ensure they maximise the value that is returned to Guyanese and that they would follow the law.
Additionally, the former TIGI Head said he is bothered by the way, which the oil sector and the Exxon Mobil-Guyana Stabroek Block Production Sharing Agreement (PSA) have been handled. Dr. Thomas also expressed dismay about the fact that there are some citizens who believe that “you want to “stop the progress if you raise objections to what is taking place.”
“But I would ask what progress are you talking about exactly? So I think we have to be very sober about it. (The current head of TIGI, Fred Collins) mentioned the giving away of 600 oil blocks to Exxon in the form of the Stabroek Block when the law says only 60 and that bothers me very much as well because we have given up any competitive advantage we could have had. Based on all the analysis that would have been put out by various organisations, it seems like we’re getting the short end of the stick…”
In a December 11, 2021 publication, Kaieteur News had featured Mr. Collins’ views on the oil sector which echoed similar sentiments expressed by Dr. Thomas. He had essentially noted that good governance of the oil sector will continue to be undermined if “the original sin” or root case is not fixed by the leaders of the day. Collins had said the “original sin” refers to the 1999 award of 600 blocks as part of the Stabroek Block licence to ExxonMobil when the law only allows for 60.
This newspaper had previously reported that former Minister of Natural Resources, Raphael Trotman had a golden opportunity to correct this illegality but chose not to, citing various reasons, such as the law allowing for such awards to be done in the event of special circumstances. But Collins was keen to note that he does not agree with this line of argument while noting that the country will pay the price for failing to correct the state of affairs that reflects total disregard for the law.
Furthermore, the TIGI Head said this “original sin” has resulted in a domino effect of dire consequences that now plague the sector and would continue until the end of the industry if not addressed. Due to the sheer size of the block, Collins noted that ExxonMobil and its partners, Hess Corporation and CNOOC Petroleum Limited, have the ability to produce multiple projects across a massive acreage. He noted that the absence of ring-fencing provisions to prevent costs for projects in the development stage are not deducted from those, which are producing has also made matters worse.
Collins noted that if the Stabroek licence had 60 [blocks] as the law prescribes, the impact of no ring-fencing provisions would not have been so economically damaging. With no ring fencing provisions in place and the leverage to go as fast as it wants with exploration and development, ExxonMobil has racked up astronomical costs, which the State is yet to audit.
In fact, Guyana is yet to audit over US$10B in costs, which Exxon said it expended from 1999 to 2017. Even if Guyanese authorities conduct the audits tomorrow, they would essentially be left at a disadvantage since the two-year timeline to object to ineligible costs has elapsed.
What also complicates this predicament Guyana is caught in, is the fact that ExxonMobil has the most favourable relinquishment provision of all the oil companies in the basin. Following negotiations in 2016 with Trotman and other officials in the David Granger administration, the oil company is allowed to relinquish 20 percent of the oil block in seven years when the law prescribes that 75 percent of the concession be returned in that timeline. This was made possible due to a loophole in Guyana’s oil laws.

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