ExxonMobil needs Guyana, more than Guyana needs Exxon

May 28, 2022 News

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… Int’l Experts ready to lend support

…it is very difficult for the people in Guyana to stand against Exxon alone, people are afraid of that and that’s why we want to support them with the power of our global movement,” Martyna Dominiak.

Kaieteur News – Given the current provisions in the 2016 Production Sharing Agreement inked between the Government of Guyana and Esso Exploration and Production Guyana Limited along with their partners, coupled with how the stakeholders are expending money and the prevailing market conditions, there is the growing conclusion that EEPGL—ExxonMobil Guyana—needs Guyana more than Guyana needs Exxon.

This was the conclusion of Martyna Dominiak of the Non-Profit Global Organisation Avaaz, which earlier this week hosted a webinar with members of the global media corps to speak on a global movement that has been gaining momentum with regards bringing about a better deal for the country or to halt the operations altogether.
The activity spearheaded by Avaaz saw contributions by Director of Financial Analysis for the Institute for Energy Economics and Financial Analysis (IEEFA), Tom Sanzillo and International Lawyer Melinda Janki.
The forum was organised in order to call on the Environmental Protection Agency (EPA) Head, Khemraj Parsram, to not renew the Liza I Environmental Permit when it expires next Tuesday, unless and until, there are additional restrictions embedded as well as fiscal reforms.
Dominiak—a senior campaigner with Avaaz leading the campaign against ExxonMobil—told those in attendance virtually, “this is a really bad deal for Guyana environmentally and financially, simply put the people of Guyana may not see this money back.”

She qualified her organization’s position further by pointing out that it was not just the Guyanese environment at stake but the world at large given the emissions to be had as a result of the hydrocarbons being extracted and climate change.
“It’s really, really important for Mr. Khemraj Parsram the head of the EPA in Guyana to make the right decision.”
Addressing the virtual session, it was noted that the campaign was launched by Avaaz, “because it is very difficult for the people in Guyana to stand against Exxon alone, people are afraid of that and that’s why we want to support them with the power of our global movement.”
Lending support to Avaaz’s campaign, IEEFA Director of Financial Analysis Tom Sanzillo in response to queries noted that the contentious contract/PSA has been structured in such a way that it is “basically frontloaded.”
He explained saying “all of the costs that are incurred, 100 percent of the costs are paid by Guyana and they are put into a formula essentially and at the end of each month if the revenues don’t cover expenses,” the balance would simply roll over to the next month.
This since, under the PSA Exxon would deduct those payments from cost oil, which is earmarked at up to 75 percent each month and the remainder split as profit.
According to Sanzillo, at present in excess of US$30B has been put in as capital expenditure so far and “it’s going to take a very long time for Guyana to pay that off and they don’t receive a fair share or 50/50 split until they pay off the development costs.”
He elaborated further by pointing to the fact that in addition to the discoveries to date, future ones will mean increasing development costs.

This, he said, would mean there is going to be a “very long time before Guyana is able to pay off everything and to then enjoy the benefits, in the meantime they (Guyana) get a small amount of money every year.”
Additionally, Sanzillo used the opportunity to reiterate, that Exxon and its partners are walking away with 85.5 percent of the oil produced, while Guyana receives 14.5 percent, which will continue as is into the foreseeable future.
“I am not sure if Guyana will ever see the more robust profits,” according to Sanzillo.
During the same forum and reported on previously by this publication, Sanzillo had noted that at present, for every US dollar that Guyana earns per barrel of oil produced in the Stabroek Block, the Oil companies walk away with six dollars.
Compounding the situation is the fact that at present, given the developments already undertaken and underway, each citizen of this country owes the oil company some US$44,000 or just about G$9M.
According to Sanzillo, ExxonMobil Guyana has envisaged the developments; those already identified would see the country repaying ExxonMobil at least US$75B to develop which would mean that the country would be repaying debts on that amount until 2070.
This situation is likely to change, since the rapid pace of discoveries would also lead to the rapid increase in debt.

 

 

 

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