The milking cow

Nov 30, 2024 Editorial, News

…Editorial

Kaieteur News- A milking cow gives and gives, until it is drained of anymore giving. The milk flows abundantly, with an incredible degree of consistency, a reward that can be depended upon, thrills the milker of that special cow. To make matters even more mouthwatering, the milk is rich, thick and creamy, and it costs little to squeeze the last drop out of that readily available, passive and ever-willing cow. Guyana’s Stabroek Block can be compared to such a milking cow, one that has grown to quite sacred proportions. It has been so for America’s ExxonMobil, with a steady, rushing tide of rich pickings.

Truly, ExxonMobil rolls in that tide of milk from this country’s Stabroek Block, which William Shakespeare described so eloquently in Act IV, Scene III of Julius Caesar over four hundred years ago: “there is a tide in the affairs of men, which when taken at the flood leads on to fortune.” Truly also, ExxonMobil has every opportunity to milk Guyana, then milk it some more, under the umbrella of expenses and cost recovery. As a mechanism that does a wonderful job, cost recovery for America’s ExxonMobil is like a British Rolls-Royce. The sound of the company’s cash register has that loud, rich, sweet sound to it. It is a joy to the ear of the company’s executives, their world filled with the many joys of cost recovery. Even Shakespeare could be said to have understated the fortune of ExxonMobil from Guyana, with cost recover featuring brilliantly. The numbers, the dollars, are like a tsunami that overwhelms everything and everyone in its irresistible path. With a provision that allows 75 percent cost recovery on projects, plus the extra incentive of no ringfencing of projects in operation, there is every motivation to milk and milk the cost recovery cow for all that it can give, every dollar that can be drained out of it.

In 2020, ExxonMobil’s cost recovery bill was relatively low, the mere matter of US$633M only. It was the opening punch, a sort of testing the resistance level, setting up Guyana for heavy blows. From that small 2020 beginning, the cost recovery bill from ExxonMobil soared in 2021 to US$1.9B, or two times as much recovered in 2020. It is nimble cost recovery arithmetic, a deep gouge out of Guyana’s already slim takings from what is a partnership deal that engages in this farce that it is a half and half sharing arrangement.

When a suffocating 75 percent of oil revenues is gone from the top for cost recovery before it could settle, then, what is left for a 50:50 profit sharing amounts to a richly entertaining joke for the company, and a joke that is embarrassingly flat for this country. ExxonMobil, never an entity to miss a moment to wave its magic wand, did just that with its cost recovery haul in 2022, which outdid the 200 percent increase of 2021 over 2020. In 2022, ExxonMobil’s accounting scientists toyed around with what cost recovery number to experiment with next to dump on Guyana, and finalized it at US$7.4B. In a year-over-year (2022 over 2021) comparison, the percentage increase then stood at 289 percent, almost three times more than 2021’s level. Guyanese are familiar with an old saying: ketch a packoo buss he bak. Or in more conventional English, never give a sucker an even break. A cost recovery provision of 75% facilitates such exploitation. The APNU+AFC Coalition created this crime, and the succeeding PPPC Government has aided and abetted in extending that crime disguised as a contract. It is what gives ExxonMobil the green light to race ahead at increasing cost recovery speeds.

In 2023, ExxonMobil decided that some discretion would prove that it is not insatiably greedy at Guyana’s expense. Cost recovery still went up to US$8.3B, but on a year-to-year basis, from 2023 to 2022, the increase was only 12.2 percent. In the span of four years, the company has recovered close to US$26B from a total investment of US$55B on six oil projects. From 500 million barrels of oil produced, Guyana’s share totaled US$5.4B. ExxonMobil milks the cost recovery cow; Guyana is given some grass as its reward for producing all that milk.

(The milking cow)

Editorial, ExxonMobil, Guyana’s Stabroek Block, The milking cow, William Shakespeare

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