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An explanation is needed for this financial conundrum

Jul 13, 2022 Letters

Dear Editor,

In a recent article, captioned, ‘Without renegotiation, Exxon contract ties Guyana to meagre share until oil is exhausted…’ (KN July 6, 2022), Mr. Phillip Rietema, EEPGL’s Vice President and Business Services Manager, stated, “With the plans we have in place out to 2025 will take investments north of $6 trillion”.

Undoubtedly, this is indeed a significant amount of investment, which is more than one thousand times the size of Guyana’s GDP (G$5.47B in 2020). This, therefore, signals a high degree of business confidence in the expected profitability that EEPGL has in the Guyanese oil sector.  More importantly, at a price of $65.00 per barrel of oil, and given the successful rate of oil discoveries, this implies that Guyana has somewhere around 92.3 billion barrels of oil. Thanks, Mr. Rietema for letting Guyanese know the value of the oil assets we own. Furthermore, given that all direct and indirect costs are covered and can be recouped over several years, please, therefore, assist us in getting a better deal, as 14.5 percent of total revenue is an obvious inequity.

Meanwhile, Editor, Mr. Rietema’s statement that, ‘We (EEPGL COMPANY) will continue to invest greater than the returns we receive and we will continue to do so for many years.’ This needs clarification.

In fact, this statement by Mr. Rietema is inconsistent with the operations of a financially viable company, for the total revenue in any successful business must be greater than the total cost of the investment; otherwise, the shareholders will be dissatisfied with the management, who will most likely be given marching orders.

In the circumstances, Editor, please ask Mr. Rietema to explain this financial conundrum.

Sincerely,

C. Kenrick Hunte, Ph.D.

Professor and Former Ambassador

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