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More oil money

Oct 26, 2024 Editorial

Editorial…

Kaieteur News – Guyana’s oil czar, Bharrat Jagdeo, was the first to say that more oil money is going to be in this country’s coffers soon.  More oil projects are poised to become operational, so Guyanese will be washing in maximized revenue.  More recently, former president Sam Hinds, now Ambassador to America, pleaded with Guyanese to be “patient” for more money will be coming from oil.  According to Ambassador Hinds, praying will help disgruntled Guyanese build patience.  All things staying constant, there are some kernels of truth to what both leaders said.  Once oil prices stay at today’s levels (or rise) and global demand stays tight, then Guyana is assured of collecting more money from its massive oil wealth.  Both Jagdeo and Hinds overlooked something or were carefully silent on a crucial component of oil, something that has much significance for an oil producing nation and its citizens.  What these two men of much knowledge ignored and had nothing to say about could have been the convenience of political expediency.  Nonetheless, it is an undeniable fact of the oil business.  They must face the fact, but seemingly prefer not to do so.

For Guyana to get/receive more American millions from its oil means that it must greenlight ExxonMobil to produce more oil daily.  More approved and operational oil projects mean more barrels by the hundreds of thousands pumped daily, likely signifies an increase in the deposits made to the New York-based Natural Resource Fund (NRF).  Higher and higher levels of daily production add more oil dollars into the NRF, once oil price stays within its current range.  On these bases alone, Bharrat Jagdeo and Sam Hinds have some substance to their ‘more money’ should be coming soon position.  As the world knows from tough history, and Guyanese know more than most, it is not what wily political figures say that matters so much.  It is what they leave out, what they smartly choose to pretend doesn’t exist, or has little bearing on what they boldly predict, even promise.

The crux of this issue about more oil money is on the way that Guyana must produce more oil daily, so that it can sell more oil and collect more revenues from its wealth.  It is a function of larger volume.  Nothing has changed relative to the obscene 2016 ExxonMobil orchestrated and executed oil contract.  Further, it is worthy to note that oil is a depleting asset, so as more oil is pumped there is an impact on stated reserves.  Unlike agricultural products, oil does not reproduce its fruits (barrels of oil) year after year.  Unless there are more commercially feasible discoveries, the known reserves are going down.  When there is increased production, the oil in Guyana’s hand goes down at a quicker rate, not to be replenished.  This is what Jagdeo and Hinds studiously avoided mentioning, while highlighting that Guyanese must be patient in anticipation of huge flows of oil cash set to rain on this country.  We will get more money from the oil, once the key variables (price and demand) remain as they are, but at what long-term cost to this country?  The oil is virtually being given away on the cheap, with ExxonMobil reporting record profits, while almost half of Guyana’s population is hungry.  The oil would be done, and what have Guyana’s leaders done?

Guyana’s leaders have not manifested the required courage to wring favorable oil terms from ExxonMobil.  Guyana’s leaders have failed miserably in developing the skills, finding ways, to get better at the oil game and beat ExxonMobil at its own self-enriching game that is done at the expense of the people of this country.  Ambassador Hinds was in the middle of the proceedings when Guyana’s first tie-up with ExxonMobil was signed in 1999.  Former president Jagdeo, Opposition Leader Jagdeo, and now Vice President Jagdeo, had so much to say about all that was wrong with the 2016 oil contract and how much he was going to do to make it better for Guyana.  Today, leaders like Jagdeo and Hinds speak in riddles: more money but leave out the ither half of the oil story (depleting resource) and their cowardliness to fight for more for Guyana.

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