To renegotiate or not to renegotiate

Oct 16, 2022 Features / Columnists, The GHK Lall Column

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By GHK Lall

Kaieteur News – I am all for renegotiation. From the inception I had made my position clear: the contract is not liked, and that was before the punishing terms and conditions of the 2016 oil contract became a part of the public conversation. Increasingly, the Guyanese public has great anxieties of the some of the more alarming and bizarre items in the contract, such as taxes, environmental exposure, and ring-fencing. More and more it has become apparent that the 2016 contract is a vise around the necks of Guyanese, while all of us have a gag stuffed in our mouths. We are suffocating slowly from the combined impacts of the clauses and corruptions in that Exxon contract that generate tremendous rage, which is not going to fade away anytime soon.

The short, simple position is that the contract must be renegotiated. Exxon has little to lose, by giving more to Guyana for its high-quality crude. Given that the production of Guyana’s oil is cheap, and that the barrels discovered keep tumbling down like a huge waterfall, it would be prudent business practice for Exxon to be generous and a fair partner, while still making out handsomely in the risk and return departments. The investment risks relative to Guyana are now largely known and well established, the sphere of operations familiar territory, and Exxon has the aces of a PPP Government heavily indebted to it (American elections muscle), and Guyanese institutions muzzled, under control, and present only in name.

The bottom line is the American oil company must be less greedy, less rapacious, and less consumed by profit margins, at the expense of all else. I fully appreciate that I am going against the Holy Grail of capitalist business objectives, which is maximization of profits. But what I am putting on the table is what Exxon knows: it is better for business to give up something to get more of better things. Though Exxon’s CEO, Darren Woods and Country Head ,Alistair Routledge (and the pack of money-thirsty sharks) have cut their eyeteeth on getting the most out of every situation, they need to rethink that strategy in an increasingly passionate, hostile, and unsettled Guyanese environment.

More citizens are joining the sharpening clamours for renegotiation, full renegotiation now. I am with them. Exxon’s leading defender, the PPP Government, and Exxon’s richest asset in Guyana, the same PPP Government, is looking more isolated and its leaders more traitorous, with each passing day that they stand against renegotiation. Similarly, and I regret having to say this: Exxon is being looked upon now as an American monstrosity; and the company’s as Ugly Americans, in the worst connotation of the phrase.

My discernment of the march of events is that there is a rising tide of anger directed at the company as the crippling details of the contract are exposed, and held aloft in inflaming manner, for all to spit upon. I think it is perfect sense for Exxon to come to the table of renegotiation in good faith, and with intentions to bargain more flexibly (and honestly), and give up a few billions to position itself to reap many more billions for itself in the long run. What could make for more business sense than such a mindset?

The contractual relationship between Exxon and Guyana as it currently stands cannot continue to go on as is. Not with 10 times more oil than was discovered when the contract was signed. Personally speaking, I think that Exxon cheated this country because its sophisticated seismic studies just about confirmed that it had hit the mother lode with another 10 billion barrels of crude in the Stabroek Block. Except that that was kept from Guyana. I repeat some advice given to the PPP Government earlier: convey to Exxon that the people are hopping mad, they are turning against the party, and they can’t be held back. Therefore, renegotiation with real results must happen and happen now. In fact, since the Vice President is such a clever operator, he could and should arrange for his people to join those coming out shouting for renegotiation. That is more than good sense, it represents rich chests of dollars, too.

(The views expressed in this article are those of the author and do not necessarily reflect the opinions of this newspaper.)