Citizens must fight back against Govt. on lopsided Exxon contract – Int’l Financial expert

Jul 02, 2023 ExxonMobil, News, Oil & Gas

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Kaieteur News – In an environment where the government has not only refused to renegotiate the lopsided Stabroek Block contract, but allows lax enforcement of the laws governing the sector to continue, Financial Analyst and Director of the Institute for Energy Economics and Financial Analysis (IEEFA), Tom Sanzillo said it is now up to Guyanese to fight back.

Sanzillo gave this view during a recent panel discussion on Guyana’s oil sector, particularly focusing on whether or not its newfound wealth will bring prosperity to the people.

He has years of experience in public policy and has also taught energy industry finance. Sanzillo served for 17 years with the City and the State of New York in senior financial and policy management positions and as the first deputy comptroller for the State of New York, oversaw the finances of 1,300 units of local government, the annual management of 44,000 government contracts, and over $200 billion in state and local municipal bond programmes as well as a $156 billion global pension fund.

The financial analyst has written several articles on Guyana’s energy sector since the country discovered the resources, and like several other specialists, have been keeping close watch on the unraveling events.

Sanzillo in pointing to the need for citizens of Guyana to fight back highlighted that two Guyanese recently took ExxonMobil to Court over their failure to comply with the Liza One Permit, which according to the High Court Judge, warrants an unlimited parent company guarantee to cover all costs in the event of a spill.

In addition to this, Sanzillo made the point that the oil company has been failing to meet the flaring requirements too and has burned millions of cubic feet of gas per day since the startup of production activities. This too prompted citizens to head to Court.

Further, he observed that the company even has an objection to Guyana’s Local Content Law, now that it is forced to use the services of more Guyanese.

“The local content law is not Exxon’s only complaint, I mean it came in there, it read the contract, it knew what the rules were. Now since the beginning, it can’t meet the flaring requirements that it claimed it would meet,” the IEEFA Director stated.

To make yet another point to support his argument of lax law enforcement by Guyanese authorities, the Financial Analyst stressed that International Lawyer Melinda Janki had won a legal suit against the state’s Environmental Protection Agency (EPA), reducing Exxon’s Permit from the previously approved 20 plus years, to five years as specified by law.

To this end, Sanzillo noted, “They are complaining about every single provision when the IHS-Markit experts who looked at the contract said the contract was effectively one-sided in Exxon’s favour so they already have a favourable contract and now they are saying they can’t meet these, what are effectively, quite I would say weak requirements.”

The Financial Analyst argued that one is left to wonder whether the oil projects would be profitable for Guyana with all the existing loopholes. He made it clear that he does believe this to be case for Guyana.

Sanzillo explained that Exxon has “far superior ways” to beat Guyanese in any negotiation but the government must be willing to participate in addressing the flaws in the contract. Instead, the specialist said that the administration has made it clear that it will allow lax law enforcement to continue.

“The willingness of the government to participate in this is something that does need to be addressed but it’s not going to change because they’ve made it clear that this is the plan, and the plan will be to allow lax enforcement, to allow this really lopsided fiscal deal to continue and to use the resources that do come in which are substantial- I’m not gonna say that’s not true, that is- but to use it in a manner, in a pretty standard economic development manner where the politicians control it at the top and it doesn’t get down to the benefits of the people.”

He had also noted that the investments being made by government into the new roads and the Gas-to-Energy (GTE) project may very well be to the benefit of the oil companies, rather than the citizens of Guyana.

In this regard, the Director of the Financial Institution urged, “The people of Guyana really in terms of their government, they had better learn how to fight back because we have seen what happens when they don’t.”

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• citizens, enforcement, fight, Government, Law, oil

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