GoG's philosophical approach to Exxon is wrong-headed. Oil revenues must not be a life-and-death matter

GoG’s philosophical approach to Exxon is wrong-headed. Oil revenues must not be a life-and-death matter

May 15, 2023 Letters

Dear Editor

Kaieteur News – If I were in the Government of Guyana (GoG), I’d insist on Exxon signing the Parent Company Guarantee (PCG) letter agreeing to Full Liability Coverage. Sign the letter – and go on with your Oil Drilling. Observe Safety Rules. End of story.

All oil drilling is done on a Wing and a Prayer. Hope an accident never happens – but if it does Exxon must be prepared to fulfill the terms of the PCG letter. That’s how it was in Exxon Valdez (1989) and Deepwater Horizon (2010) – the Oil Companies picked up the whole tab for all compensation and damages, up to the last dollar in billions of dollars. Small host countries like Guyana must not ever be exposed to the risk of an oil spill. That risk has always been borne fully by the Oil Giants.

GoG (led by de facto leader Mr. Jagdeo) has the wrong approach in dealing with Exxon. “I think of my oil revenues as the difference between life and death” – that’s GoG’s approach to Exxon. Exxon knows that – and will now play the GoG to the hilt and will get away with murder.

It started the moment the PPP took power in August 2020. Mr. Jagdeo declared the Oil Contract cannot be renegotiated because of the invented fictions labelled “Sanctity of Contract” and “Investor Confidence”. Mr. Jagdeo began defending the contract as a life-and-death matter for the nation. This approach was Mistake #1.

Now AG Nandlall comes up with another BS argument – “Economic Disruption”. Economic Disruption is the basis of his Appeal against Judge Kissoon’s order that Exxon must provide a PCG letter. The Judge’s order is grounded in law – and the law seeks only to protect the country against exposure to the risk of an oil spill. Again, Exxon perceives the weaknesses of the government. Mistake #2.

Philosophically, the government, run by Mr. Jagdeo, has the wrong approach when dealing with an oil giant. Never let oil revenues become a life-and-death matter for the nation. That makes you vulnerable and impotent to resolve any issue with Exxon.

If the government is willing to bat for Exxon, why would Exxon be willing to negotiate anything? Why would Exxon bring a spirit of compromise to the table? Why would Exxon come to the table at all? Why would Exxon sign the Parent Company Guarantee letter?

Mr. Jagdeo doesn’t have a good concept of the Sovereignty and Independence of the country. He has already surrendered big pieces of it to Exxon. Exxon now owns the country. Mr. Jagdeo has gleefully accepted 2% Royalty (Compared to Suriname’s 6.25%). Absence of Ring-Fencing will ensure Guyana gets 14.5 barrels out of every 100 until all the reserves are depleted. And, corporate income tax on Exxon’s profits is waived for the life of the contract. Exxon must pay corporate income tax on profits made in Guyana to the U.S. government, but not to host country where the profits are made. Now see if you can grapple with that. If this is not collective humiliation for the Guyanese people, I don’t know what humiliation is.

GoG has exposed its many weaknesses. Exxon knows it. And this spells humiliation of the Guyanese people.

GoG should step aside. Call time-out. Stop defending the contract. Do not appeal the Court ruling. Let the Court order go into effect. Rebuild the EPA as an Independent Agency.

Has Exxon threatened to shut down oil drilling? Call Exxon’s bluff. Not bluffing, let Exxon go. There are other Oil Giants standing in line to come in and do oil drilling on new terms – better fiscal terms, respect for the environment, respect for the government, respect for the dignity of the Guyanese people.

Sincerely
Mike Persaud