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Ring-fencing our prospects

Jan 09, 2024 Editorial

Kaieteur News – “We do not see dealing with any company as a fixed, static situation. One has to, over the period as things evolve, deal with them in the particular context. It is easy for somebody to ask us, Are you going to ring-fence? And you expect a yes or no answer. For us, there is a rule for ring-fencing, but it can only be determined as you have the figures and all the information at your disposal.”  We thank the Leader of the Opposition, Mr. Aubrey Norton, for the courtesy of his answer on this burning issue of ring-fencing.  Meanwhile, we are sifting through his answer on ring-fencing in an effort to make heads and tails of what he said, what the Opposition Leader was actually putting on the table.  The good news (as we see it) is that he has not ruled out ring-fencing, making it into a nonstarter, a dead letter issue.

For starters, Mr. Norton said that, from his group’s perspective, “we do not see dealing with any company as a fixed, static situation.”  That is good as far as it goes, with some substance attached.  But in some key instances that drives the business relationship between a company exploring and exploiting natural resources, and the country owning those resources, there will be that “fixed, static” condition.  As an example, it cannot be that this is the standard on this project, and for another project, it is something different.  It may be the level of taxes, or the percentage of royalty, but those situations are usually fixed and static (other than for sliding scale scenarios).  If not, it would be a recipe for uncertainty and confusion.  In other words, we do not think that it can be that there is agreement to ring-fence project A, but then changing that scenario for project B and C.

On a country to company, or group to company situation, there has to be some fixed baseline on which the principals agree, and from which they operate.  Companies have a business to run, and commercial pressures to deal with, therefore it is compulsory that some kind of “static situation” prevails.  If not, then what we think is the flexibility that Mr. Norton is searching for could end up occupying considerable chunks of precious time that nobody could afford to spare.  There has to be a starting point, and points of harmony, on which to proceed in any context.  With refence to context, Guyana has been in the oil production business now for four years, and there has to be some level of intelligence as to whether ring-fencing is feasible or not.  We do not know what could be clearer than that, and are perplexed as to why there is all this anxiety.  If ExxonMobil were to be asked as whether ring-fencing should apply to upcoming oil projects, there is near absolute certainty that the company will immediately and unambiguously answer with a loud ‘NO!’

It is appreciated that Mr. Norton is being careful to the point of stiffness on this ring-fencing issue: “there is a rule for ring-fencing”.  Perhaps he will go into a wider elaboration in his next press conference.  It would be of immense value to Guyanese if Mr. Norton is less guarded, as though his life depended on it, and enlightens the public about some of the key elements of this “rule” that applies to ring-fencing.  By “rule” we take it that he is speaking about the underpinning of project numbers, on an individual basis, and how they possibly fit into the larger picture of a family of projects.  He did say that part of his group’s possible basis to ring-fence or not to ring-fence would be driven by A) having all the relevant information in hand, B) what that information, inclusive of facts and figures, indicate, and C) what ring-fencing action is justified, as bolstered by such information.

In fairness to the Opposition Leader, a straight ‘yes’ or ‘no’ answer could box him in, and come back to haunt him and his group.  But right now, the information which he speaks of should have been in house, so that an informed position and decision about ring-fencing could be made.

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