Each household can receive at least $1M annually had Jagdeo ring-fenced oil projects – Glenn Lall

Aug 28, 2023 News

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Kaieteur News – The Government of Guyana’s refusal to ring-fence the oil projects, specifically those currently in operation at the Stabroek Block is preventing at least $1 million from flowing to each household across the country.

This is according to the Publisher of Kaieteur News, Glenn Lall.

Lall, a business man and stern advocate for a fair oil deal in a recent public commentary argued that Guyanese families can become millionaires if government simply ring-fences the oil projects.

A ring-fencing provision would prevent oil companies from using revenue generated from a production field to offset costs in another project. In the absence of such a provision, ExxonMobil have been using the proceeds from the Liza One and Liza Two projects, currently producing about 400,000 barrels of oil per day, to pay for costs related to other Stabroek Block projects.

Though this provision is not catered for in the 2016 Production Sharing Agreement (PSA), government can include this clause in the Environmental Permits, it grants to Exxon for each new project. So far, Guyana has already approved five projects for the oil giant without this provision.

As a result, the K/News Publisher is calling on government to ring-fence the sixth project being sought by the company, along with all other future developments in the 26,800 square kilometers Stabroek Block.

Lall believes a ring-fencing provision is even more important compared to a meter to verify oil production. He said that Vice President Bharrat Jagdeo, the country’s key petroleum spokesman and manager of the sector understands the importance of ring-fencing, since he threw quite a tantrum while wearing the cap of Opposition Leader, over the previous administration’s failure to institute such a provision.

A passionate and almost angry Bharrat Jagdeo claimed that the then A Partnership for National Unity + Alliance For Change (APNU+AFC) Coalition government “sold” the country to “foreigners” because that administration failed to include ring-fencing to shore up profits from the 2016 PSA with Exxon.

At that time, Jagdeo assured that when the People’s Progressive Party Civic (PPP/C) returned to office, this would be a priority when the contract is renegotiated.

“They sold us out to the foreigners. The oil companies, every time there is a find out there, our people should be sad because nothing comes our way. We are gonna renegotiate those contracts because that’s not what we had in mind,” Jagdeo said.

He added, “When we were in the early days, we were coaxing the people (ExxonMobil) to go along. They (Coalition) came into office – three billion barrels of proven reserves and they gave up zero royalties, no taxes, no ring-fencing.”

Lall however pointed out that the Coalition failed to ring-fence the Liza One and Liza Two projects and requested assistance from several international institutions. To this end, he pointed out, “The IMF (International Monetary Fund) came here in 2017 and made over 100 recommendations to Guyana – one was we must ring-fence each oil project. They came back in 2018 again, said please ring fence the oil projects, came again in 2019 and said the same thing, return in 2020 and beg Guyana, please ring- fence your oil projects.”

In addition to the IMF, the newspaper Publisher pointed out that the United Nations Development Programme (UNDP), along with another international expert, Chatham House and the World Bank urged Guyana to include a ring-fencing provision for each project.

Lall reprimanded the former Head of State for taking office in 2020 and committing a more egregious act compared to the Coalition, by signing off on three more oil projects without including a ring-fencing provision.

The businessman believes that if the Vice President had included a ring-fencing provision, each household could have been receiving US$3.5 million annually, commencing this year from the Liza One and Liza Two projects.

He explained, “Do the maths…them pumping 400,000 barrels a day, at $80 per barrel, take out $20 per barrel as production cost to bring it up, you leff with $24 million a day. Split that in two is US$12M fuh Guyana.  Multiply that by 365 days is $4,380,000,000, divide that by 250,000 households, each house would be getting (US$17,420 yearly or) $3.5M a year, had Bharrat Jagdeo ring-fenced those 3 projects he approved.”

Lall said government can keep $2.5 million from the $3.5 million and every household would still benefit from $1M from the Liza One and Liza Two projects alone. On the other hand, the newspaper Publisher argued that the administration continues to refuse including such a provision thereby forcing Guyanese to settle for “dog food salaries”.

He reasoned, “Your neighbours’ fowls, on both sides coming over into your yard, eating out all your chicken feed everyday leaving your chicks without food.  The other neighbours who mining chickens, see what’s going on and begging you to put a fence to avoid that and yuh not paying heed to that?”

Similarly, Lall said, “Exxon eating out all of Guyana’s food, while the nation starves.”

The advocate is calling on Guyanese to join citizens who will be protesting today (Monday) at Houston Public Road, East Bank Demerara from 10:00hrs to call on government to stop the “robbery train” for the sake of future generations.

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• costs, household, Lall, oil, ring-fence

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