A bundle of contradictions and a handful of broken promises

Oct 20, 2023 Features / Columnists, Peeping Tom

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Kaieteur News – Consistency in a government’s actions and keeping its promises is a rare commodity. And this is all the more so in terms of the PPP/C’s management of Guyana’s oil and gas sector.

Consistency lends to credibility. Promises made in opposition must not be treated casually because it is these promises which cause people to elect a government into office. The PPP/C’s management of the oil and gas sector has been a bundle of contradictions. It has also been characterised by the backpedaling on commitments it has made when in Opposition.

While in opposition, the PPP/C lambasted the APNU+AFC (A Partnership for National Unity and Alliance for Change) for signing a Production Sharing Agreement (PSA) with oil companies that was lopsided. The PPP/C, hungry for change, promised to renegotiate the contract once they came to power. However, as fate would have it, the PPP/C swiftly changed its tune when it assumed office in August 2020. It invoked the sanctity of contracts as its primary rationale for not pursuing a renegotiation. This abrupt U-turn left many in the Guyanese public bewildered and disillusioned.

While in Opposition, Vice President Jagdeo, a key figure in the PPP/C, was vocal in his criticism of the absence of ring-fencing for the Liza 1 project. Ring-fencing is a standard practice in the oil industry, which isolates the financial performance of individual oil fields to ensure that profits from one field do not subsidize losses or exploration in another. But the irony lies in the fact that, once in government, the PPP/C has failed to ring-fence successive field development projects in the Stabroek Blocks.

What further complicates this already twisted narrative is the draft revised Production Sharing template developed by the PPP/C for the development of future oil blocks. In this revised template, the government insists on ring-fencing, a move that appears to contradict its actions regarding the Stabroek Block. Even more perplexing is the government’s attempt to now shift the narrative by claiming that the absence of ring-fencing in the Stabroek Block has long-term benefits for sustainable oil production. This assertion is made while still maintaining the position that Guyana has a narrow window in which to exploit its oil resources. The doubletalk is a confusing and acts as a smokescreen for the failure to demand ring fencing in the third, fourth and fifth field development plans that have been approved for the Stabroek Block.

This lack of consistency in the government’s approach to oil contract is detrimental to the nation’s reputation and its ability to attract future investments. International oil companies carefully evaluate the stability of a nation’s regulatory framework before committing to projects. The glaring contradictions and backpedaling by the PPP/C regime will send worrying signals to potential investors that some investors are favoured more than others. The double speak on ring-fencing will further confound future investors.

The absence of ring-fencing for the Stabroek Blocks puts Guyana at a disadvantage. Without ring-fencing, there is a risk that profits from more profitable oil fields being diverted to compensate for losses in others, ultimately depriving the nation of the full financial benefits of its oil reserves. International experts have already advised the government to move ahead with ring- fencing. Guyanese must demand consistency from their government. The PPP/C regime must be held accountable for its promises and commitments made while in opposition. It is on the basis of those commitments and promises that presumably it was elected to office. It is crucial for Guyanese citizens to advocate for the implementation of ring-fencing for projects in the Stabroek Block. This would safeguard the nation’s financial interests and provide greater revenues for the development of the country. Guyana could benefit from independent oversight or audits of its oil contracts and agreements to ensure that the interests of the nation are protected. The government must actively take into consideration the views of persons who are experts in the petroleum sector.

The PPP/C regime’s conspiracy of contradictions and backpedaling on its commitments regarding oil contracts is a cause for concern. The present stance poses risks to the nation’s economic well-being. This is why it is important for Guyanese to come out and to demand consistency from their leaders. The implementation of ring fencing for projects in the Stabroek Block is not just a matter of financial prudence. It is about ensuring that Guyana’s maximizes the benefits of its oil wealth.

(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.)

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• APNU+AFC (A Partnership for National Unity and Alliance for Change, Guyana, management, Peeping Tom, PPP/C

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