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- Commission wraps up site visit, prepares Arthur Chung Conference Centre, Liliendaal for M/V Barima public inquiry
- Opposition leader demands ring-fencing of future Stabroek Block projects
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- Govt. denies negligence in Mahdia dorm fire
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Ram is right
(Kaieteur News) – We agree with Chartered Accountant, Chris Ram, that Guyana receiving more money as its share of Profit Oil does not make the 2016 ExxonMobil oil contract a fair deal. ExxonMobil has a trump card in exploration expenses, which could cover many hundreds of US millions, gouge deeply into Guyana’s now higher profit share. The company has the greatest say in what exploration expenses are. Then, there is the unknown of war, which is usually not controlled by any corporate power, including ExxonMobil. The end of the war centered around the Strait of Hormuz should lead to lower oil prices. Lower oil prices mean a lower profit take for Guyana, with the higher rate factored in. In effect, the ExxonMobil 2016 oil deals remains a bad deal for Guyana. More profits do not change that reality.
Executives of ExxonMobil have pretended that their clever handiwork, the lopsided 2016 Production Sharing Agreement, is a great oil deal for Guyana, and that it is off the renegotiation table. The contract is so ironclad, so perfect in its construction, yet ExxonMobil has still found it necessary to engage the Government of Guyana, when an advantage or benefit is sought. The same, however, is not allowed to Guyana. If ever there was an oil contract that stands as a model for corporate predation, it is the ExxonMobil-Guyana 2016 oil contract. On its own terms, the contract is vileness and an obscenity, of the lowest order.
A country new to the sophisticated and complicated oil game is roped in, held hostage, and abused. There is the monstrosity of no ringfencing of oil projects to keep them as distinct, standalone, self-contained silos. What can ever be fair about no ringfencing? With four offshore projects in Guyana operating at close to their maximum daily production capacity, and sometimes above, ExxonMobil has hit world financial headlines with its profit hauls from this country. More money from profit oil for Guyana, due to the full repayment of the company’s investment in the Stabroek Block, does not change the one-sided condition of the oil contract. It represents what is unbalanced and unfair, and still hemorrhages this country, notwithstanding higher profit collections.
Exploration costs are a point of vulnerability that ExxonMobil is skilled enough to exploit at one time or another. Given that much of the massive Stabroek Block is still untouched and unexplored, the company has plenty of room to explore for more oil, and a greenlight to build a pile of expenses. Expenses that can put a big dent in Guyana’s new level of profits that it now receives. All the time, the oil deal is still the deal that has such a commanding presence in this country. The tapering off of hostilities between the U.S. and Iran could come sooner than later, leading to some downward pressure on oil prices. ExxonMobil and the Guyana Government have a backup for such a development. More production immediately, and more projects ready to roll off the company’s assembly line in the near future. A depleting asset produced at accelerated levels, with hopes for it to be replenished from costly exploration initiatives. It is almost like a Catch-22, with Guyana losing on several ends: lower oil reserves, lower profits, and more expenses to be repaid to ExxonMobil.
In addition to no ringfencing, there is the provision in that crippling oil deal where ExxonMobil does not pay any corporate taxes. Taxes are a fact of life, and universally. In its hand-crafted 2016 oil contract, ExxonMobil gave itself a blanket exemption from paying taxes into the Guyana treasury. But still holds itself out as a genuine partner of Guyana. The smaller, less agile, partner is stripped at every opportunity by the bigger one, and there is the blatant hypocrisy of claiming to be a true partner. The ExxonMobil oil deal is bad for Guyana. The ExxonMobil oil deal is wrong for Guyana. The ExxonMobil Guyana oil deal is probably the best thing that ever happened to the company in its 150-year history. The sooner that all citizens get that in their heads, the quicker they will see beyond increased oil profits. Exploration costs and war ending could impact heavily. The ExxonMobil’s contract must be renegotiated.
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