Congressman Jason Smith: Supports GoG Buyout of CNOOC’s shares in the Exxon-led partnership

Mar 21, 2023 Letters

Dear Editor,

I write with reference to your lead article of March 18th reporting Congressman Jason Smith, Chairman of the U.S. House Ways and Means Committee saying: “ “America must be committed to outcompeting China around the world while strengthening key American supply chains, increasing U.S. production of affordable energy resources, and improving partnerships with allies in the Western Hemisphere and beyond”.

Congressman Jason Smith: Welcome to Guyana. The Guyanese Diaspora in New York supports US Government policy “to outcompete” China in the Western Hemisphere. Towards this end, we urge you to raise the option of a Guyana Government Buy Out of the shares of CNOOC. As per the Exxon Oil Contract, all loans and interest GoG may take to achieve this goal is paid for from Oil Revenues.

Mr. Routledge, Exxon’s Guyana president says Oil Companies have pumped $30 billion into this project. Most of that money is borrowed. Who pays the interest? It is all paid for from the Oil Revenues. Not from Oil Companies’ profits.

All CAPEX (Capital Outlays) is paid for in the 75% capped CR, Cost Recovery

All interest on CAPEX is also paid for in the 75% capped CR.

Congressman Smith, the Contract is egregiously lopsided in favor of Exxon. Two percent Royalty is below industry standards. Suriname’s PSA contract provides for 6.25% royalty.

On the Royalty alone, on 11 billion barrels, Guyana loses/foregoes $35 billion. [11 BB times 4.25% times Av price per barrel $75 = $35 billion]

Oil Companies also pay no corporate income tax on profits made in Guyana but pay tax to US govt.

Congressman, permit my repetition for emphasis: How can Exxon be required to pay tax on profits made in Guyana to their home govt, USA, but not to the host country where the profit is made? This is an unbearable insult to the Guyanese people. How did this happen? And, why can’t the contract be renegotiated to permit the removal of this insult to the Guyanese nation?

We know for a fact that the contract was not negotiated – but signed. Then Minister Trotman told the Guyanese press he had been instructed to sign. This suggested an “inside deal”. Or, just as bad, Exxon had been manipulating the leaders of the then govt that authorised the signing.

The Govt. of Guyana has refused to demand renegotiation based on political considerations, not based on the intrinsic unfairness of the fiscal items in the contract. There is abundant evidence that GoG is afraid to demand renegotiation – because of a historical perception that U.S. government will collaborate with Exxon to oust the government from power, if it were to do so. I have read scores of blogs – all by supporters of the government expressing this fear. Congressman Smith, would you be kind enough to make a declaration on this matter? I am Guyanese-born and have lived in the United States for the last 50 years. I do not believe U.S. foreign policy works like that – at least not since Church Committee hearings of 1970’s.

Congressman Smith, it is not possible for you to travel to Guyana and not know that the Guyanese people have been agitating daily for their government to demand renegotiation. And, that the real reason for government’s intransigence is that if they were to do so, they would be ousted from power. This is an unsettling state of affairs of the Guyanese nation – and if left unresolved, it means Exxon and partners would be free to cheat Guyana of scores of billions of dollars. There is a clause in the contract that explicitly allows for renegotiation. But the GoG is too afraid to make use of that clause. Congressman Smith, I appeal to your good offices and good consciences to speak to the unfairness of this contract imposed on the Guyanese people and to the fears of the leaders of the Guyanese Government.

Regards,

Mike Persaud

Exxon, Guyana, Mike Persaud, oil, Oil revenues

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Congressman Jason Smith: Supports GoG Buyout of CNOOC’s shares in the Exxon-led partnership

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