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Jagdeo’s asset wizardry

Dec 13, 2024 Editorial, News

Editorial…

Kaieteur News- It is fascinating to watch how Guyana’s chief oil policymaker, Vice President Bharrat Jagdeo, squirms in this role that he gave to himself.  From all indications, his first policy and his only policy is to come up with some bizarre concoction that looks out for the interests of ExxonMobil.  He went to great lengths to do it before with a full parent company guarantee in the event of an oil spill.

Now he is doing it again with the assets Guyana is paying 100 per cent for should there be a major oil spill at ExxonMobil’s offshore operations.  This is how the man who should be fighting bravely to get the best for his country and people from their oil wealth, weaves a trap for himself.  His all-out efforts to put what benefits the American oil giant first, regardless of what the cost is to Guyanese, leaves him looking both ridiculous and pitiful.

“It’s a simple thing. You’re not part owner of any company. You don’t own these assets. So, ExxonMobil puts in the investment. They create a company; the company has these assets. We are entitled to receive in the future, 50%, once everything is paid off…you are entitled to collect 50% of future profits and they get 50% and then 2% royalty on the gross…that’s your entitlement to collect.”  This is Jagdeo at his most clever, which is what most condemns him for being so weak that he can’t even take a stand for what is overpoweringly logical.  A national leader ought to have more respect for his own dignity than to grasp at the guidance some unbelievably mindless and possibly characterless counsel deposited in his hands.

ExxonMobil is investing tens of billions of US dollars in offshore oil projects in Guyana.  ExxonMobil is recouping 100 per cent of its investment billions, every cent of every dollar, right from the top of oil revenues.  ExxonMobil is first in the collection/reward line with 75% cost recovery rights per the 2016 contract.  ExxonMobil is also exacting a rate of return on its equity billions invested, but which rate is unknown to Guyanese.  ExxonMobil all along has a monopoly of 100 per cent entitlement and priority in those areas, pursuant to its depraved contract with Guyana.  ExxonMobil benefits from the opportunity to invest its money in Guyana’s rich oil territory.  ExxonMobil gets to recover its total costs, and what does Guyana get for putting up its much-in-demand undersea asset?  ExxonMobil gets Guyana to pay for all those assets, and every other associated cost in full (in full).  Then, Bharrat Jagdeo turns everything on its head, so that he can humiliate himself before the dictates of ExxonMobil.

Suddenly, it is convenient for this nation’s chief oil policymaker to stand before Guyanese and talk about 50 per cent.  All along, in this 50-50 partnership, the company was raking in 100 per cent of what it represented as having spent, and which, therefore, had to be repaid in full.  But in the event of an oil spill of catastrophic proportions, Jagdeo has the shamelessness to embarrass himself through brazenly mentioning 50 per cent partnership.

By any reasonable thinking, what Jagdeo apparently did was assign 50 per cent responsibility for an oil spill to Guyana, at least when its 100 per cent paid for assets are involved.  ExxonMobil is not taking back (recovering) 50 per cent of its investment plus its half share of profits. To emphasise, ExxonMobil recaptures all of its investments, and then this so-called profit calculation.  But there is Jagdeo in what is probably one of his worst reincarnations arguing that half of the assets that Guyana completely paid would be swallowed by an ExxonMobil generated oil spill. We assert that Guyana invested thousands of square kilometres, a virtual ocean of coveted offshore space for ExxonMobil to roam and explore at will.  Despite this half and half partnership that policy chief Jagdeo now embraces, ExxonMobil benefits in that it is made absolutely whole for every penny invested in Guyana.  It is all cost-free upside for ExxonMobil.  But should there be the downside of an oil spill, 50 per cent of Guyana’s offshore assets are now committed.  What next will Jagdeo do to please ExxonMobil?  Frankly, he can’t do more to walk over all Guyanese.

(Jagdeo’s asset wizardry)

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