OP:Ed – President Ali on renegotiation fallout

Feb 13, 2023 Features / Columnists, News, The GHK Lall Column

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By GHK Lall

Kaieteur News – I must congratulate His Excellency, President Ali for his near perfect mimicry of Exxon’s Guyana Country Head, El Supremo, Alistair Routledge. The American Master in Guyana, spoke in the starkest terms against renegotiation of the sweet 2016 oil contract, his company executed with this country (under the PNC).  Mr. Routledge warned that any action towards renegotiation would be “very destructive” to investor confidence.  As I tender thanks to Mr. Routledge, the thought comes that the mere contemplation of renegotiation now assumes the perilous for Guyana.  It is scratch investors and be prepared to feel pain.

This is expected of Exxon’s Guyana Country Head.  But for Guyana’s own Head-of-State to advocate against renegotiation along the same lines, using slightly different words, confirms how much Exxon has this country sewed up, and how the leaders in our national government sing from Exxon’s songbook.  It is unpardonable for any national leader to do his best imitation in servitude to Exxon’s interests and its likely upset investors. The latter is imaginary and exaggerated.

According to President Ali, putting on his Wall Street hat, there would have been “serious financial ruin.”  What Mr. Routledge dismissed in two words (“very destructive”), Guyana’s scrappy leader needed three.  Regardless, there is an eerie Siamese attachment to what both leaders said publicly.  I am wondering whether the President uses Exxon’s scriptwriters, but camouflages the arrangement through slightly changing the words.  The choreography is stunning, revealing.

In addition, our own patriotic President Ali was proud to point to the hundreds of Guyanese who are benefiting from their association-employment, education and involvement-in the oil and gas sector.  I cheer President Ali’s nifty footwork with that one, which needs a little polishing and refining, so that the real story, the bigger picture of Guyana’s oil is tabled.  Guyana has a population of 750,000 plus citizens.  For him therefore, to speak of hundreds is an exercise in denial, silkiness, and accentuating the positive, while sweeping under the carpet the missing links in Guyana’s Age of Oil.  They are grim and lengthy, with plenty of locals forced to visit bread lines and soup kitchens, so that they manage to the next meal.  How about that, Dr. President, for the fastest growing economy, and ranking among the top GDP performers in the inhabited universe!  I appreciate that President Ali in his hurry to defend today what his group used to rightfully curse (the PNC contract), and run interference for Exxon, must play the hand he has.  Meaning, he speaks in hundreds, while hundreds of thousands of Guyanese handle the short end of the stick with hopelessness and despair solidifying.

Anytime Exxon needs a new chief counsel, I nominate Guyana’s President Ali, which I am sure local and international bars will waive any educational requirement.  When I read my own President going to bat for Exxon and its unbreachable Maginot Line of no renegotiation, I hasten to remind him that he is not President of some subsidiary of Exxon Guyana, or Esso Guyana, but of the Cooperative Republic of Guyana itself.  I respectfully exhort my President to refrain from tarnishing the national presidential coat of arms in this casual manner.  It reeks of ancient kowtowing, worse collaborating.

Further, it was astonishing that President Ali could have seemingly alluded to Venezuela and what happened when oil producing countries get too aggressive for their own good.  I regret that Guyana’s President and his advisers barked up the wrong tree for comparison purposes.  What Venezuela is paying a harsh price for was its nationalization of American business under whatever guises, which led to our neighbors being made into examples not to be admired or replicated.

In order that everyone-America’s Routledge, Guyana’s Ali, and the world of investors out there-is on the same page, renegotiation does not mean that Guyana must move from 2% royalty to 12% (as mouth-watering as that sounds).  Or that the 50:50 profit sharing should be replaced by something along the lines of 90:10 or 80:20, or even 70:30, again as prospering as those could be to Guyana.  Rather, renegotiation should be on a staggered basis.  I would start at 5% royalty, with openness to maneuvering; profit sharing can be 60:40 in Guyana’s favor; expense deduction should be finalized somewhere between 55-65%.  These are a start, with agreement to revisit in 2-3 years to engage on zero taxes, insurance coverage, and what should and should not be cost recoverable.  These are admittedly broad, and deliberately so.  It gives everyone at the table, room for honest and fair developments favorable to all Guyanese, not only the less than 1% of the population that benefits from this oil.

I would contend that we could have a unique contract, as renegotiated in parts; one more palatable to Guyanese, and not that expensive for Exxon, or that destructive to investor confidence.  For Guyana’s President to parrot Mr. Routledge’s line is the pits.  Last, I hope that none dare to assert that the world does not work this way.  The world works the way we want it to, including that of oil and contracts.

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

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• Exxon’s, GHK Lall, Guyana, Mr. Routledge, songbook, The American Master, The choreography

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