H@rd Truths By GHK Lall – Unconcerned Exxon shareholders

Jun 15, 2023 Features / Columnists, News, The GHK Lall Column

Kaieteur News – The Exxon lobbying machine sprang into action, and the rest is history. Greed takes over, things fall in line. Deep-pocketed, heavyweight stakeholders and shareholders in Exxon did their own fact-checking and liked the results. No need to worry, Guyana is golden, there is no threat. Not from those people over there.

GHK Lall

Even if there is an oil spill of considerable volume, what is Guyana going to do? Who is it capable of conquering? Certainly not Exxon, and its combined strengths in politics, legal legions, oil smarts, and financial firepower? It is why the shareholders of Exxon voted so overwhelmingly against two proposals that sought insights into oil spill risks and related litigation; even an actuarial assessment proposal was shot down.

Guyanese may be asking themselves why this level of unconcern? I offer an inside view from actual experience as to how these things unfold, conclude. Absorb this scenario that I share (again). There is a product and activity that is risky, causing concern. The questions are fast and furious. ‘How is the risk rated? What is the probability of regulatory discovery? If discovered, what is the damage/penalty? What about other fallouts? How much is this product estimated to make?

The last question is crucial because it incorporates the most relevant, most sensitive, and most vital interest? It is of risks versus rewards. A US$25-50M fine will always be trumped by US$100M in projected revenues, especially when risktakers and revenue enhancers have the final say; the name of the game is making money. In Guyana’s instance, the risk of a spill is real, particularly with increased production, and a tight cluster of wells in a small operating space. The risk is neither remote nor imminent, but it is practical to slow down with a bow to the conservative, and Guyana having the kind of protection that insulates its citizens from carrying any burdens due to Exxon’s “gross negligence” and possible recklessness.

The investors in Exxon, who are mostly fiercely vigilant about, and protective of, the monies entrusted to them, would have also factor into their risk analysis, what I call the Guyana condition. There is a PPP Government that is so pro-Exxon as to be indistinguishable from the company itself, its senior officers, its top lobbyists, and its leading cheerleaders. Though there are some pockets of local concern about an oil spill, the environment is favorable to Exxon because the kind of compulsory insurance that should be obtained is fought against by a majority bloc in Guyana’s parliament. The national government itself has joined arms with Exxon to fight against the country and its own citizens and prevent them getting the proper coverage (company guarantee). All this is highly favorable to Exxon and its now unconcerned shareholders. But there is another reason, one of even more considerable weight, which induces the shareholders of Exxon to be causal with their concerns. It has to do with the law.

Guyana is heavily handicapped in mounting the kind of legal challenge, or embarking on a prolonged war footing, in the various court systems that a case could reach in the event of an actual oil spill of cataclysmic proportions. In more nuts-and-bolts language, Guyana does not have what it takes to emerge victorious in a vicious court fight of junkyard dog flavor. Whatever legal skills may be recruited, Exxon could outlast and outfight such, even if it has to call upon its deep stable of far-flung relationships and lean on golf course partners to sway matters its way. Why endorse any payment to a set of backward people of a certain stripe? What would they do with all that money? Who cares about them, once the cash registers ring constantly? I take the liberty of reminding my fellow Guyanese (again) of Union Carbide and Bhopal, India. Some lives are cheaper than some, and because some standards of living are lower than that of others, then pittances for compensation close out all arguments, condemnations, and fallouts. This is why that US$2 billion maximum is bandied about, as being a most attractive proposition.

Further, it is now common knowledge that there is little leadership and political will to confront Exxon and force its hand on this coverage guarantee issue. Guyana’s Vice President Jagdeo has asserted that he would take Exxon to court should circumstances necessitate. Good luck with a 20-year battle in that realm. Revisit the Exxon Valdez court travels, and this is what Guyana faces, with the odds of compensation commensurate to the wastages inflicted by a bad oil spill growing smaller and smaller as Exxon extends and extends the calendar.

It is because of all these considerations, and lengthy familiarity with how the sophisticates operate, that a clear picture emerges regarding why Exxon’s shareholders are so unconcerned. In their eyes, there is miniscule downside, no major loss stared at, even if there is big blowout. Exxon leaned on enough players of influence, whispered in enough ears, and twisted enough arms. Here is the fast and nasty: Exxon can’t lose. And Guyana can’t win. Goodbye.

(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.)