Jagdeo blames Coalition for "sh*tty" oil deal, but refuses to renegotiate contract

Jagdeo blames Coalition for “sh*tty” oil deal, but refuses to renegotiate contract

Jan 22, 2023 News

Kaieteur News – The bigger the body of water a goldfish is in, the better its chances of thriving and growing bigger. So, if you take your goldfish out of the little bowl on your nightstand, and place it in a large aquarium, it will grow a bit bigger. But it has no idea how much more it can thrive in a natural pond. This is the kind of trick that may play out in oil-rich Guyana if Political Leaders do not tell the full story, or if they refuse to act.

Vice President, Dr. Bharrat Jagdeo

If the Bank of Guyana reports that the Natural Resource Fund (NRF) made US$1 billion from oil production, this will be seen as a lot of money to Guyanese. This is because the sheer scale of such revenues being made from one sector on an annual basis is not something to which the country is accustomed. But the Central Bank only reports what goes into the NRF. It does not report the earnings of ExxonMobil subsidiary, Esso Exploration and Production Guyana Limited (EEPGL), nor that of its Stabroek Block partners, Hess and CNOOC.

Minister of Finance, Dr. Ashni Singh’s budget speech last Monday indicated that Guyana received US$1.099 billion in profit oil payments in 2022. But the total value of crude oil exported for the year was US$9.978 billion. This means Guyana received 11% of the value of crude exported for the year, and the oil companies made away with 89%.

The Finance Minister further explained that Guyana got US$155.2 million in royalties. With royalties added to the country’s earnings, it becomes 12.6%, leaving 87.4% or US$8.7 billion for the oil companies.

US$1.2 billion is a lot of money. But how does it fare when the oil companies’ earnings are put into perspective? It all comes back to the 2016 Production Sharing Agreement (PSA) that governs petroleum operations at the humongous Stabroek Block. Signed by former Minister of Natural Resources, Raphael Trotman, the deal gives Guyana an industry-low 2% royalty. It also allows Exxon, Hess and CNOOC to take advantage of a cost recovery ceiling of 75% of the oil they produce from the blocks, then split the profits 50/50 between them and the Government.

Despite all the criticisms this PSA has faced locally and internationally, there are some people who still say that it was a good deal.

Vice President Dr. Bharrat Jagdeo nearly cursed out one former Minister over the insinuation that the deal is a good one, according to an interview he had with ‘Guyanese Critic’ Thursday evening. He said Ramjattan told him once in a conversation that the former Government left the People’s Progressive Party (PPP) with the oil deal, from which revenues are now being derived.

The Vice President wanted to ‘cuss up’, as Guyanese would say. He told Critic “I wanted to use an expletive. I might have even done that.”

Jagdeo said the former Government did not leave any sector on a positive note. And finally, on oil, he said, “What they left us was a shitty agreement.”

Though the Vice President, the Chief Regulator for the oil sector, may believe the PSA is “sh*tty”, he refuses to renegotiate it.

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"sh*tty" oil deal, Dr. Bharrat Jagdeo, Natural Resource Fund (NRF), Political Leaders, Vice President

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