Jagdeo is off mark again!

Feb 29, 2024 Features / Columnists, Peeping Tom

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Kaieteur News – The role of the journalist at press conferences is to pose the questions. However, it appears that every time Vice President Bharrat Jagdeo is cornered, he seeks to pose questions to journalists knowing fully well that they would not have the answers to those questions at their fingertips.

If we had journalists skilled in repartee, they would have long embarrassed Jagdeo. One way of countering him asking journalists questions is to simply say, “With all due respect Sir, it is this side which asks the questions.” Or the journalist when asked whether she knew the answer to the question could have simply replied to Jagdeo, “No I don’t, but I am sure you are going to tell us.”

At his most recent Press Conference, the Vice President was asked whether he had a list of the US$20B assets which he claimed the oil companies have in Guyana and which could be sold if the need arose to do so to compensate for an oil spill. Admittedly, the question was not properly framed. In his response, Jagdeo asked the journalist whether she had seen the balance sheet and financial statements of the oil companies. He then pointed to the proposed sale of Hess to Chevron saying that it was US$60B deal saying that this was the market value of the assets which would also include reserves.

First, of all Jagdeo ought to know that the Production Sharing Agreement which was signed and which he refuses to renegotiate was between the Government of Guyana and Esso Exploration and Production (Guyana) Limited, Hess Exploration Guyana Limited, and CNOOC Nexen Petroleum Guyana Limited. Guyana therefore has an agreement with entities incorporated in Guyana. The Government of Guyana does not have an agreement with the parent companies of the entities operating in Guyana. These locally incorporated companies are not likely to have US$20B in assets in Guyana that can be levied upon in the event of an oil spill.

This is one of the reasons why groups and individuals in Guyana have been pressing for a parent company guarantee by Exxon. They are doing so because they believe that in the event of an oil spill, these companies do not have the value of assets in Guyana to compensate for any damage and destruction.

In March 2022, it was reported that the Government of Guyana was negotiating with the operators in the Stabroek Block for parent company guarantees.  Jagdeo was quoted as saying, “Separately, not part of the permitting process for Yellowtail, we’re working with the companies to secure a parent guarantee that will cover the entire Stabroek Block. Not Liza 1, Liza 2, Payara or Yellowtail, but the entire Stabroek Block. But that is a separate issue.” (Guyana Times March 27^th 2002.)

So if the government was confident that the oil companies had substantial assets on which to levy, why was it necessary to initiate negotiations about parent company guarantees? And what has been the outcome of these negotiations? Where are the parent company guarantees?

Jagdeo is also capable of understanding the difference between the assets on the books of the oil companies, i.e. book value, and its fungible assets. A company’s book assets and fungible assets represent distinct facets of its financial position.

Book assets, typically recorded on the balance sheet, encompass tangible and intangible resources owned by the company, such as property, equipment, patents, and trademarks. They are valued based on historical costs or fair market value. On the other hand, fungible assets denote interchangeable financial instruments or goods, like stocks, bonds, or commodities, which can be exchanged on the market without affecting their value.

Creditors often target a company’s fungible assets rather than its book value assets when seeking to recover sums due or owed. The fungible assets offer ease of conversion. Fungible assets, such as stocks, bonds, or cash equivalents, can be readily sold or exchanged in the market. This allows creditors to swiftly recover their funds. In contrast, seizing and liquidating book value assets like property, equipment, or intellectual property can be a lengthy and complex process, often involving legal hurdles and depreciation considerations, which may result in diminished returns for creditors.

So Jagdeo is deluding himself on two counts. The intangibles that he speaks about are not fungible assets. And it is doubtful whether the locally incorporated assets of the operators of the Stabroek Block amount to US$20B. If that were the case, there would have been no need to pursue parent company guarantees.

But don’t tell that to Jagdeo before he confuses himself further.

(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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• Bharrat Jagdeo, Countering, journalists, Peeping Tom, Vice President

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