Lessons for Guyana from Tengiz and Kashagan

May 08, 2022 Letters

Dear Editor,
Oil is on the lips of Guyanese, its riches on their minds, maybe their sleep, too. There have been ceaseless arguments, positions, and counter-positions about contracts, the inviolable nature of them, and the grave in which the one we live with has dumped us. So, we are stuck in this political and national tangle, which automatically means racial one also, about what we should do, how we should go about, and who is doing something, or nothing, to improve Guyana’s fortunes from its oil wealth. Amidst the endless clamour, I share something that could serve as a lesson, several of them, due to the precedent it established over a decade ago with a man and place that caused shudders in the oil world.
The leader’s name is Nursultan Nazarbayev, and the place is Kazakhstan. There were two fabulous oil fields, Tengiz and Kashagan, in the middle of the opposing sides fighting for supremacy of their production fruits. On one side was the host country and its indomitable and sagacious leader, Nazarbayev; on the other were several of the old Seven Sisters and a couple of the Big Four oil majors. The names resonate: ENI, Total, Shell and, of course, our own dear Exxon. The Japanese were on the side of the big boys too, through the presence of Inpex. BP and Statoil jumped ship by trying to sell their share in the vast Kashagan field to the Chinese (CNOOC), but President Nazarbayev said that Kazakhstan would have none of that, and substituted itself as the taker. What followed next was remarkable for leadership wisdom, courage, will, and a lot of some anatomical parts, which I leave to the understanding of mature audiences. Before going to what happened between Kazakhstan and the oil companies over Kashagan, I must go first to Tengiz, and that story.
Tengiz was a great big discovery, with Chevron and ExxonMobil leading the oil pack. Nazarbayev was unhappy with his country’s 1993 2% oil contract, which is a number familiar to all Guyanese by now. He wanted a big low-cost loan and more income for his nation from its mammoth oil wealth; what he got instead were delays in production and huge costs passed on to his country. Nazarbayev retaliated, when his EPA dropped a US$73 million fine on the oil consortium for hydrogen sulphide violations. Chevron’s boss, David O’Reilly, rose up in rejection, against what he saw as leadership experimentation, if not blackmail; production ceased. Exxon long notorious for resisting such heavy-handedness, was only too glad to lend its muscle and go along. Nazarbayev had to retreat and lick his wounds. But he came back at his tormentors, and it was how he did so. In this, there is a lesson, several of them, for Guyanese leaders.
Comrade Nazarbayev bided his time until August 2007 when all work in Kashagan was suspended for environmental violations. Next, in September, the laws of Kazakhstan were amended in favour of the national interests, if and when the actions of foreign oil companies jeopardised those interests. If this necessitated the changing of oil contracts, then that was what was going to be. Then, in January 2008, the oil companies were compelled to agree to a Memorandum of Understanding, which resulted in them paying US$5 billion for costly production delays. In addition to those, the share of the Kazakhstan national oil company doubled to 16.8%, with each of the consortium members giving up a precious 2% of their stake. I mention that this included ExxonMobil.
For sheer guts and other physical attributes, I think that what President Nursultan Nazarbayev ranks right up there for consummate audacity, unblinking doggedness, and powerful patriotism. I say this, despite knowing fully of his two sons and their high-profile presences and roles in Kazakhstan, as well as Comrade Nazarbayev (alleged) love for jewellery and the finer things in life. It is my belief that if our oil leaders and oilman in Guyana could probe for openings, seize opportunities, and sum from somewhere some of the sturdier prowess manifested by President Nazarbayev, this country would be in a better place.
Guyana could shave off some of its contract burdens, chip away at the needs and vulnerabilities (both are present) of Exxon, and get a large handful of much needed and much due benefits for this country and its peoples. Leaders would still be able to continue to steal also. They must be bold, bad, and brazen. A little leadership soundness, and the ingeniousness and resourcefulness that flow from such would help in the crunch.
Sincerely,
GHK Lall

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