Guyana must not be held permanently captive to a fear of Exxon

Sep 01, 2023 Letters

Dear Editor,

Finance Minister Manmohan Singh told the Lok Sabha, “India could not be held permanently captive to a fear of East India Company”, by which he meant that it was time to stop using old fears of the colonial powers (1984). Local columnist GHK Lall writes: “Sometimes, I wonder if I still have a country, anymore”.

I think of the quotes from Manmohan Singh and GHK Lall as cues to ask, Is Guyana being held captive to a fear of Exxon? And, bad consequences to follow – if it were to ask for renegotiation of a lopsided oil contract? And, what might those consequences be – Oil Drilling stopped, ousting the PPP government?

And, if the government believes and internalizes that fear, is that the reason it chooses to defend the contract (even after first condemning it) and to literally now suck up to Exxon?

GoG has surrendered its sovereignty to Exxon. Jake Tran asks: Where does GoG end and where does Exxon begin? It appears GoG and Exxon have seamlessly merged into each other. Perfect harmony. [Exxon has already announced its next jamboree for next February at the Marriott. What is the objective of this annual jamboree?]. Exxon’s Billboard in Guyana announces Guyana gets 52% “profit”. It is really 14.5 barrels out of every 100.

An oil contract that runs for 30 years is a different type of contract from one to purchase land, house or even to buy and sell food crops. Performance of one is completed within 12 months; the other runs for 30 years. One provides for renegotiation; the other does not.

Should a 2% royalty, for example, continue for 30 years for the Stabroek Block (11 billion barrels reserve)? If a government in a Sovereign country chooses to defend that contract, rather than articulate reasons for its renegotiation – then Guyanese citizens can reasonably and justifiably conclude that Guyana is now held captive in an unholy alliance with Exxon.

Columnists like GHK Lall and psychologists who specialize in power relationships should go to work explaining this unholy alliance between GoG and Exxon. Is this just a power imbalance thing? Has Exxon gone further to exploit the weaknesses of the State: racially divided polity, weak laws, and a vulnerable government subject to enormous fears of losing power if it were to choose to demand renegotiation?

Can Guyana afford to forego $35 billion on Royalty alone to Exxon’s shareholders – because of GoG’s stubborn refusal to renegotiate for a fair royalty rate? [11 bb times 4.25% times average price $75 = $35 billion. Guyana’s 2% royalty vs. Suriname’s 6.25%].

Darsh Khusial (see Oggn.org) has done calculations to show Guyana loses/foregoes over $100 billion on 11 bb of oil. Howard University economist, Kenrick Hunte has also done calculations showing that after 4-years of extraction operations, Guyana’s share of barrels has not risen above 14.5/100 barrels. The reason for this is the absence of “Ring Fencing” of project costs (commingling of costs).

The citizens of Guyana together with their government must work to free themselves from a captive relationship with Exxon.

Mike Persaud