Oil sector plagued with gross mismanagement

Dec 23, 2022 News

…as Govt. allows companies to show disrespect for Laws – Int’l Lawyer

Kaieteur News – International Lawyer and Transparency Advocate, Melinda Janki, is convinced that the People’s Progressive Party Civic (PPP/C) Government is more interested in serving the interests of players in the oil industry even if it means leaving the citizenry worse off.

In an invited comment on Guyana’s oil sector performance since marking its third anniversary on December 20, 2022, Janki said transparency, accountability and good governance remain woefully lacking.

She contended that the country is shackled to massive project costs for the Liza One, Liza Two, Payara, and Yellowtail developments in the Stabroek Block. Janki noted that the rate of recovery for these costs or what they include continue to be treated as top secret.

International Lawyer and Transparency Advocate, Melinda Janki

In any case, she said these projects are ultimately working to benefit the pockets of ExxonMobil and its partners, Hess Corporation and CNOOC Petroleum Guyana Limited.

Janki said, “Every time the Government approves another project, Exxon is better off and the people of Guyana are worse off.”

Readers would recall previous commentary by the Lawyer regarding some of the fatal flaws in the Stabroek Block Production Sharing Agreement (PSA) which leave gaping loopholes for abuse. One of these includes the fact that Exxon is not restricted on the interest rates that can be recovered on loans. Industry standards dictate that there must be a cap on the amount of interest to be recovered and in some cases, it is disallowed entirely.

Furthermore, Guyana merely collects a two percent royalty and a 50 percent split of oil that remains after expenses have been covered for the Exxon led consortium. Janki maintains her position that these fiscal terms are exploitative.

The Lawyer also stressed that the onset of oil has exposed the weakness of Guyana’s democracy. Janki said, “The Government is elected to serve the people of Guyana. The nation’s laws already give the government power to protect the Guyanese people from abuse and exploitation by the oil companies…But Government officials are making decisions that benefit the oil companies. They are not serving the people of Guyana.”

Janki alluded to the breakneck speed with which the Government has approved the Payara and Yellowtail projects. Both received regulatory green lights in less than two months, representing an abnormality and violation of international best practices.

She was keen to warn that Guyanese must not fall prey to the trap that oil will bring transformative growth or improvement in their lives. Instead, oil increases the gap between the rich and poor.

“Today we see members of the Government driving around in big fancy vehicles bought with taxpayers’ money and dancing while there are people eating out of garbage bins and sleeping on the concrete pavements. That is what happens with oil. It is nothing to be proud of. It is degrading,” the Transparency Advocate commented.

She said citizens must not lose sight of the fact that oil and gas resources are always at risk of unleashing a deadly curse that leaves nations worse off than they were prior the emergence of the sector.

“Look at Venezuela, Nigeria, Indonesia, Equatorial Guinea, Chad, Cameroon etc. Look at how people in the oil/gas countries end up poor while their Governments and the foreign oil companies get rich,” she commented.

For Janki, the last three years has seen massive change, the type that wreaks disrespect for Guyanese and their Laws. Her observation is that people are shocked at the behaviour of major players in the oil sector and their gross contempt for the country. She said it no longer matters whether one is pro-oil or anti-oil. “People across this country want to see that the oil sector respect national law.”

With the foregoing perspectives, among other considerations in mind, Janki said 2022 has been another year where oil has been plagued by poor governance and a repulsive display of contempt by oil companies for the people of Guyana.