18. Guyana – How much money will Guyana receive – All hands on Oil – Concerns ExxonMobil’s Agreement – V.150817
From “Rags to Riches”, “ a nation that did not expect to win the lotto”, “ soon to be the richest corner of South America”.
The prime goal and objective ?
Convert these 5.5+ billion barrel recoverable (@ April 2019), 13 discovery wells, proceeds and income in equal, high prosperity, happiness and excellent qualty of life for all Guyanese.
In 2045 ?
Yeahhh, we have achieved it, we are definitely a high developed, rich country. Comparable with e.g. Singapore. Just come and see with your own eyes. And check. Our high level of infrastructure, modern roads, bridges, housing facilities, education, hospitals, hotels, airport, social welfare etc. etc.
1. Introduction – by Marcel Chin-A-Lien
2. Petroleum Geology Offshore Guyana – March 2017 – from Newell Dennison.
3. All hands on oil – August 3, 2017 – Reblogged from Verian Mentis-Barker.
4. Guyana: will its oil boom benefit the people ? Al Jazheera, Video, July 30, 2018
1) Introduction by Marcel Chin-A-Lien – For further info, also see my other posts on Guyana, in Chapter Petroleum Exploration
1.1. Guyana. Concerns about arrangement with ExxonMobil.
1.2. How much money would Guyana get from ExxonMobil’s offshore oil production?
1.1 Guyana. Concerns about arrangement with ExxonMobil.
The contents of the arrangement that the Guyana Government in 1999, has signed and apparently recently renegotiated with ExxonMobil, has never been published (P.D.@ december 2017: finally published by Guyana Government; this blog was written august 15, 2017).
(P.D.1, inserted August 15, 2017 – kaieteursnewsonline.com – Abena Rockcliffe-Campbell :“ With all this issue about good deal and so on, you are making an assumption that we renegotiated the contract. That contract was already in place, we inherited that contract,” said Jordan.
P.D. 2, The arrangement was finally released and published in december 2017, after much pressure from the Guyanese society.
My observations in this post of august 2017 are nonetheless still valid. In the course of 2018 I will publish my personal full observations on the published contract).
The first contract was signed on or around June 14th 1999 by Mrs. Janet Jagan.
With the appendage of Her Excellency and President (Re. V. Mentis Barker – All hands on oil, august 3, 2017).
FYI.: Cheddi Berret Jagan (1918 – 1997) was minister-president (1957-1964) and president (1992-1997) of Guyana.
Janet Jagan – Rosenberg (1920-2009) was the wife of Cheddi Jagan, married in 1943. She was president of Guyana from december 1997 – august 1999 and signed the first contract.
MInister Trotman recently declared that his government had decided that ” it was not in national interest to discuss contract details at this time ” (kaieteurnewsonline.com).
Therefore there is presently, 18 years later, a lot of uncertainty and public discussions on the arrangement, on its exact content, on transparency. Amongst all the stakeholders, inhabitants and de facto “owners” of their own natural resources, regarding this important item.
This to know for example how much money Guyana would get from its offshore production.
In 1998, also when Mrs. Janet Jagan was president, Guyana signed an arrangement (PPL) with CGX.
My educated-guess is that the arrangement signed with ExxonMobil in 1999 could resemble the arrangement signed previously with CGX.
The contents of this PPL can be found by researching Internet publications.
The Petroleum Prospecting License (PPL) was signed between CGX Energy,Inc.(Company) and the Government of Guyana (Government) on June 24, 1998.
The main articles/clauses are:
- Cost recovery production allocation is as follows.
Maximum Cost Recovery is 75% during the first 3 years.
- Afterwards 65%.
- Profit Oil Split (Developer Share):
- During the first 5 years, 50% for the first 40,000 b/d.
- And 47% for Production above 40,000 b/d.
- After 5 years, 45 % for all production.
- The Developer does not pay income tax (…what a blessing from Heaven…there are almost no places on this globe where no income tax is paid…).
- The PPL provides that the income tax is paid from the Government’s share of the profit oil (…what a piece of cake for contractors, CGX and/or ExxonMobil, how beautiful negotiated).
- The Company has an exemption from VAT, exercise taxes, duties, fees, levies and from property tax.
- The Company does not pay royalty. ***
- This is considered to be included in the Government’s share of profit oil.
- (…what a piece of cake for CGX and/or ExxonMobil).
- This was apparently re-negotiated with ExxonMobil in 2016.
- Was upgraded from 0% formerly to 2% presently.
- In my opinion this is still very/far to low.
- I would suggest/negotiate if I were to be in the negotiating team, at least 6.5% in post-2017 Licenses. This is almost standard in surrounding areas.
(*** Also see: Petroleum (Exploration and Production) Act 1986 – Act. No. 3 of 1986. And Act No. 4 of 1992:
that is an Amendment of only section 51 in the previous act 1986, ” Part V – Financial – Royalty on petroleum obtained under license “:
45 (1) Subject to this Act, the holder of a petroleum production license shall, in accordance with his license and this Act, pay to the Government royalty in respect of petroleum obtained by him in the production area to which the licence relates. vs.
50 (1) Royalty payable pursuant to section 45 and any penalty under section 48 is a debt due to the State and recoverable in the same manner as revenues due to the State ***).
Inserted comment: how beautiful is life. You first pay royalty. And immediately recover it back. What is the purpose ? To earn royalty and to give it back immediately? Do not understand this. Cannot believe it.
17. Training expenses of US$ 40,000 per year are required, only during the exploration period. These are qualified as exploration expenses. A very low amount.
17. Annual license rental payments of US$ 40,000 per year are required during the exploration and production period. An extremely low amount.
In my opinion this represents a very good deal (arrangement) for the Company.
And a rather ” inconvenient deal ” for the Government.
Tip that can benefit a country with billions of US$:
Always be so diligent to first design, negotiate and only later sign your own PSC.
Customised with those clauses and articles you wish to have.
Consult e.g. with a clever and seasoned PSC and E&P specialists and advisors with worldwide experience. Once signed it is extremely difficult to change and adapt it substantially. It can yield you really billions US$ extra income, a good contract.
From what I perceive from internet publications the Government did recently renegotiate the original PPL with ExxonMobil and obtained somewhat better conditions.
Including a royalty (2%) and possibly a 50% – 50% overall share.
(P.D. August 15, 2017 – kaieteursnewsonline.com – Abena Rockcliffe-Campbell :“ With all this issue about good deal and so on, you are making an assumption that we renegotiated the contract. That contract was already in place, we inherited that contract,” said Jordan.)
One would assume that the original 1999 PPL was rather favourable for ExxonMobil. Given that it was signed in a period when there was relatively little interest of IOC’s in offshore Guyana.
As is usual in such cases and in high risk, still non-oil-proven basins, it is to be assumed that Guyana has granted rather favourable (“soft”) conditions to ExxonMobil. In order to attract exploration investments with a clear work program, including seismic and drilling.
From “Rags to Riches”, “a nation that did not expect to win the lotto”, “soon to be the richest corner of South America”.
As a blessing from Heaven and the El Dorado, the subsurface of the prolific Guiana-Suriname Basin. In tandem with the splendid assistance of ExxonMobil and their superb team of explorationists and drillers. Already 13 discoveries on a row. Unbelievable. Never seen earlier in a virgin exploration area. Chapeau, top.
Completed with a contract already signed in 1999 Guyana is now beginning to reap the benefits of an unprecedented oil boom.
Much has been debated on the 1999 Petroleum Agreements.
Very good, necessary, lessons learned?
More important now.
The way ahead?
Now that it has become a proven basin, it is a different ball game.
This is my personal opinion as an independent global petroleum and mineral resources explorationist. And its intimately related business. commercial, strategy and policy development.
It represents what I would recommend or aim to achieve myself.
If I were part of a Country negotiation or any other team.
(…Sure, if I was sitting on the IOC/Contractor side, as I have so often been.
Then it would negotiate the reverse, most certainly…But that is the game of doing business…
The smartest guy wins.
The innocent, weak and poorly prepared guy looses.
The ” fittest survives “, as Darwin already stated in his famous evolution theory in 1895).
- Contracts with new entrants could / should be negotiated with a much better share for Guyana.
- Focussing on items as the royalty percentage: least 6.5%.
- Mind you:
- Sixty one (61) relevant (sub-)articles and clauses are omitted. Not included and not defined in this slender contract.
- These all cover items that can/will have an impact. Such as on profit share, environment and fluent, efficient management of the petroleum assets, by the host country.
- Ring fencing:
- Mind you, does not even appear in the Definitions. Should have been included on page 7. Was omitted, on business as usual purpose, by ExxonMobil ?? Though, financially could/will be impacting positively on cost recovery purposes for the IOC; and negatively for Guyana.
- Article 10 – p.25, Annual License Rental Charge: US $ 1 million. Far to low. A real piece of cake for such an unusual massive area. Could be some US $ 20 million.
- Dutch fees (” Dutch treats”) in the Netherlands licenses vary around 500 Euro’s/km2/year (with a sliding, increasing scale).
- Ceiling for cost recovery, can be adapted/lowered.
- Above all:
- Drastically optimise Guyana’s Profit Share:
- From ‘ Profit Oil “,
- With a sliding scale, immediately after the IOC has recouped it’s investments from the ” cost oil ” .
- For Guyana Profit Oil Share for example the following sliding R-Factor Slices:
- 1) 0-1.25
- 2) 1.25- 1.50
- 3) 1.50- 1.75
- 4) 1.75 – 2.0
- 5) 2 – 3
- 6) > 3
- This would yield a sliding and gradually increasing Guyana Share (%) of respectively 20, 25,30, 40, 50, 70.
- Plus the flat, fixed royalty.
- Total profits ? Much, much higher, up to some 65%; how many billions US$ does this represent ? Just calculate, run your own cash flow and revenue model.
- Much better, higher (really billions US$) than with the actual Agreements.
- That have just 2% Royalty.
- And a flat 50% from cost oil, for host country share.
- Calculate how the revenue through time would be for Guyana in following case:
- Given some 5.5 billion barrels reserves (…at April 2019 and more to come…). A production increasing from of 100.00 in 2020 up to 600.000+ barrels in the near future (2025).
- As a comparison, with Suriname, next door. Still frontier, not-proven offshore @ august 2018. Most contracts signed before the 2015 Liza discovery.
Operators in Suriname are obliged to pay a royalty equivalent to 6.25% of gross production value and corporate tax at a rate of 36%.
- Financial Engineering:
- Valuation and cash flow modelling
- In tandem with the expected/prognosed production profiles from the prospects & leads in the-to-be-licenced-areas and in existing fields.
- The Fiscal Regime/clauses in the PSC has/have to be flexible, not static.
- Why? Adapted to the prognosed prospectively of each block and license. These (can) rank very different in prospectivity.
- This includes using exploration and production geology, geophysics, reservoir engineering, that are fundamental.
- The best results that I myself could obtain was in the following setting:
- An efficient negotiation & fiscal regime team has to consist of merely technical capable persons (…no politicians, unless they have this following knowledge), thus:
- An integrated multi-disciplinary team.
- Including and where All individuals have extensive grounded knowledge of following 7 (seven) items:
- Petroleum exploration and production geology (1)
- Reservoir production engineering (2)
- Geophysics (3)
- Petroleum Sharing Contracts and Fiscal modelling (4)
- Contract negotiations (5)
- Petroleum laws (6)
- (7) Environmental clauses in the present PSC do not cover all possible casualties and clear responsibilitues for the Operator/Contractor:
- Social Responsibility and the protection of the Environment.
- Article 28. Sub-Articles 28.1 to 28.6, page 63 and 64:
- Just 40 sentences.
- In case of a major oil spill ? That could reach neighbouring countries as Venezuela, Trinidad, Barbados etc. in some 48 hours with the westward flowing Gulf stream.
- What if ?
- Such as in the 2010, with Macondo, 3.2m barrels oil spill.
- Cost BP 13.8 bn US$ in damages @ January 2015 New Orleans courts
- Additionally the Clean Water Act penalties would come on top of the more than US$ 42 bn that BP set aside or spent for clean-up, compensation and fines.
- By the time you are not Friends but rather big Enemies, and in Court?
- Because of all the claims from neighbouring countries due to environmental damages caused by a/your major oil spill.
- Do the meager 40 sentences of Article 28 cover and safeguard and cover All your country interests ? Sure about that ?
- Will you win a possible (many, many billions US$) lawsuit with just these 40 sentences and 1.2 pages of text in your trembling hands ???
- Personally I have my most, most serious doubts.
- My own Article on Environment would cover all these casualties. Such as also in the past negotiated for Clients that I served.
- Faites vos jeux, international and petroleum law specialists.
- You would by then be in the driver’s seat. In Court.
- In case of an oil spill
- (…But, sure…you would be in Gold Rush Business. Making lots, millions and millions of money… for legal advise and corresponding fees…from your Clients…during many, many years…).
The main objective of Guyana should be to maximise its petroleum wealth by encouraging appropriate levels of offshore activities.
To this end Guyana must design a robust fiscal system with for example the following characteristics.
It should provide a fair return for both the state and the international companies. It has to be clear and avoid undue speculation, just as is now frequently surfacing in the press. Administration has to be efficient without undue rules, permits and burdens. At the same time it should provide enough flexibility and create a healthy, competitive competition and market efficiency.
A much different Petroleum Sharing Contract (Petroleum License Agreement) is certainly highly recommended in my opinion.
Designed and ” financially & subsurface potential engineered ” to produce a contemporary, ” larger and higher fair share distribution and fractionation ” for Guyana and IOC’s.
(Inserted note @ May 2018:
I published this blog in august 2017. On my site and on Linkedin.
During 2017 IMF elaborated a confidential report for the Guyana Government (Nov. 2017). Unfortunately it is not published on internet. Apparently it includes the main and same observations that I made before in my blog.
Most important PSC items for offshore exploration and production one can figure out on its own. Or with just a small seasoned technical team.
One does not need a whole (…super expensive…) IMF team to ” unveil ” the most important items.
But just a few seasoned global explorers.
One way to do this is to first develop a clear view of the leads, prospects and play types that Guyana’s offshore acreage has and can offer to IOC’s. This is geology, geophysics, reservoir and production engineering.
Especially on what their expected rewards potential is (subsurface areal OIP – GIP and financial – NPV, cash flow).
Align and link the potential of the different licensing areas with specific corresponding PSC clauses. Customised PSC profit share scales. Not a static fiscal profit share scheme, for all the differing/different leads, prospects, licences..
This is usually and frequently done.
Myself I had the opportunity to contribute, with this licensing strategy and philosophy, in other areas, such as nearby Guyana. Where PSC’s have been signed optimal for the home country.
Otherwise you give away for free billions of €€€ and $$$ that you want & need to have in your very own pocket.
1.2 How much money would Guyana get from ExxonMobil’s offshore oil production, Liza Phase 1?
How much money would Guyana get from ExxonMobil’s offshore oil production. From coming Liza Phase 1 development.
See on figure the Government Revenue from Profit Oil, in green color. Figure published by ExxonMobil.
This gives a fair idea of what everyone wants to know.
Guyana Government Revenue from Profit Oil is some 7 billion US$.
This amount would be received in the period 2020 – 2033.
Payout is successful in about 4 years.
The economics of the Liza – Payara – Snoek giant fields development is thus highly profitable, with an IRR exceeding 100%.
Guyana earnings, according to its Business Minister Mr. Gaskin ?
” Minimum of US$300 million annually from 100 barrels of oil per day at today’s estimated US$60 per day.”
From march 6, 2018, Demerara Waves – https://guyaneseonline.wordpress.com/2018/03/11/exxonmobils-contract-will-yield-more-royalties-than-gold-business-minister-dominic-gaskin/#more-65372
” Addressing the opening of a Private Sector Commission- organised seminar under the theme “Oil and Gas in Guyana: Perspectives in Guyana”, Gaskin said he had no problem with criticisms of the contract but contended that comparisons with Ghana and Uganda amounted to “incomplete and misleading” information.
Noting that ExxonMobil was not compelled to renegotiate the valid 1999 agreement with Guyana, the Business Minister said the 2016 “revised” Production Sharing Agreement which provides for a two percent royalty and 50 percent of profit oil would earn the country a minimum of US$300 million annually from 100 barrels of oil per day at today’s estimated US$60 per day.”
Marcel Chin-A-Lien – Advisor Petroleum Exploration & Production, Business-Commercial-Policy Development, PSC’s.
For grounded, vintage stewardship to successfully find lots of oil, develop your business and get sustained value for money ?
Contact & Contract Me at email@example.com ”
2) Petroleum Geology Offshore Guyana – March 2017 – from Newell Dennison.
What kind of exploration concepts, playtypes, leads, prospects and subsurface elephants exist in offshore Guyana ?
Taken from and published on internet:
Petroleum Geology Offshore Guyana by Newell Dennison – GGMC –
Guyana Oil and Gas Association Inc. – Oil and Gas Conference – Marriott Hotel Georgetown, Guyana – March 26-28, 2017 –
A brief account of features typical of the offshore Guyana & Takutu bains.
3) Guyana, oil, Exxon, Hess, CNOOC China, Lisa, Stabroek
Reblogged from : Verian Mentis – Barker – August 3, 2017
Reference, read more: http://xpressblogg.com/all-hands-on-oil/
When the International Financial News Organs mention the Liza 1 and 2 and the Stabroek oil wells found in the waters of its off-shore, it’s always with Guyana as the subtext.
Just look at the swagger in these headlines of Forbes Financial Magazine, June 30th 2016, in article by Christopher Helman “With Second Big Oil Discovery, Exxon Puts Guyana On The Map”…yeah, putting Guyana on the map…as Economist Magazine ‘Gusher in Guyana’, article of June 29th 2017 tops it off with sub heading ‘It will take better politicians to resist the corrosive power of petrodollars’
Just for the record….if there is any noble propensity here, it is certainly tempered by a reputation of avarice and narcissism and this is what makes these magnates mount their horses of hubris and ride in to town…not because they are overtaken by any zealous munificence and definitely not because they want to make Guyana its benefactor… only because they are driven to multiply their riches by oil.
First off, their mental image of the leader of Guyana -of any third world country for that matter- comes pre-packaged. For them he’s a meretricious caricature of leadership, achieves spectacularly little, an unrepentant dictator who constantly revises the laws to ensure longevity of rule – as he sips quality champagne from a diamond glass on the tax payer’s dollar…maybe on a private 747 – just to add to the visual.
There’s a famous recount of what happened when Esso Chad, a consortium led by Exxon Mobil, brought business to the little African country and paid USD 4 million to farmers whose lands were spoiled for farming and $1,000 USD for every mango tree cut down to facilitate oil extraction. The choices made by the farmers on spending their new found wealth grew into a common joke and became the prevailing anecdote for the oil magnates when discussing contract compensation.
Reportedly, in their unworldly joy, they spent their money only as they knew how. One took a bath in beer, another left his mud hut and checked in to a four star hotel in Ndjamena for several weeks, others took several more wives. Some did invest in wind mills and more cattle but the focus was on those who did the less enterprising things.
And, in this presumed unsophistication of the third world leader, capitalist buccaneers like Exxon find justification in exploiting their simplicity – a charge copiously documented in Exxon’s multiple Court Cases, legal defenses and its numerous charges and settlements with third world countries.
These modern day marauders never really stumble upon oil, you know.
When they show up, they’ve already done their home work…analyzed the politics of the country, identified the venal politicians, the philistine business men and developed the right kind of palm oil – for those whose palms would be greased.
The Integrity Forum calls it the ‘Voracity Effect’ but it’s really just public officials at their dishonest best.
Thing is, there was a thriving culture of local corruption, when Exxon first sought its exploration in Guyana’s waters. That first contract, covering the Stabroek Block, was signed on or around June 14th 1999 by Janet Jagan with the appendage of Her Excellency and President –titles that will not be validated in this forum, since their legitimacy remain under question.
Nevertheless, Janet signed that exploration contract during the tenure of a dictatorship that did business with foreign governments and conglomerates through murky agreements, creative accounting; much of which landed the country on world Corruption Indices and remain the subjects of internal forensic audits- audits we hope to see completed before the next national elections. She was a pliable subject, undoubtedly and fit the profile of many that resource extractors do business with.
It may be coincidence that resource rich third world countries have this type of politics but it’s incontrovertible that big oil finds a great deal of its holdings in these countries and remains the number one culprit cited when there are discussions involving the paradox of plenty, in these poverty stricken zones.
We were motivated, primarily, by the need to keep an eye on the nation’s patrimony; much of which has been pawned for returns that cannot be shown, by clear accounting, to have benefited Guyanese other than those who served under the PPP dictatorship… recalling the generous $115 million paid by Norway as disincentive to preserve the rain forest which was then sold by the Jagdeo Government to Bai Shan Lin, Vaitarna, Barama in a cross-selling, bid-rigging, price-gouging racket, then covered up in a crafty accounting scheme by, then, Finance Minister, Ashni Singh and signed off by Gitanjali Singh the Director of the Audit Office (Auditor General) who was none other than his wife.
But we were propelled by the involvement of Exxon, this business magnate, steeped in a series of investigations, an unscrupulous chaser of natural resources and market share through investment in resource extraction from small underdeveloped nations.
These are some of Exxon’s not so illustrious deeds:
In 2000, the construction of the USD 4.2 billion Chad-Cameroon pipe line with the promise of 35,000 local jobs …only that it was grossly inflated and deliberately exaggerated …many of the jobs were for bush cutters which lasted no more than 2 days at $6.50 per day and for those with a few more skills, jobs lasted just about three weeks…while Exxon flooded the job site with its imported western laborers.
The promise to the Chadians and Cameroonians to bypass wild life and fishing the mainstay of locals; of improved education and the installation of electricity – leaving instead, half constructed homes, non functional parks, and abandoned fish ponds and electricity projects.
In 2003, its $ 500 million bribe paid directly into the private account of Teodoro Obiang Nguema Mbasogo, the President of Equatorial Guinea, for concessions to the nation’s oil.
Hess is no better. We read the exposé of Hess oil and its link to the Russian mob through Rosnef, -Russia’s oil- and its culture of bribery, more notably to Latin American countries and to African countries through trading name, Amerada Hess.
The Chinese Government’s CNOOC has had its share of bribe, scandals and litigation as far away as Iraq and as close to home as the Caribbean.
And Halliburton, the latest natural resource pariah to join this school of sharks, comes with decades of investment misbehavior, creative accounting that overstates its investment in collusion with corrupt leaders and uses that overstated amount to grease the palms of sleazy government officials.
So, when we learnt of the Coalition’s reticence to declare the details of the oil extraction contract, with Minister Trotman declaring that his government had decided that “it wasn’t in national interest to discuss contract details at this time”, that “they didn’t want to expose all their business to the world”, we thought of the salt-goods shop mentality of the previous government and remembered how these same officials, these upper echelon Coalition members, lambasted the PPP Government from the podium of the Opposition for withholding information on contracts with the Chinese de-foresters – information that would have served the nation better, were it known before they were scammed by them.
And don’t get us wrong.
We see Jagdeo’s demand for ‘full disclosure’ as political impiety, as the hallmark of hypocrisy, as barefaced duplicity and dismiss it as lamentation, distraction, by an insidious loser who is dying to know if contract negotiations are as nefarious as his were – overflowing with personal perks, coordinated with corruption, governed by grifting and grand larceny – and as a pitiful Pavlovian response at the thought of missed undue enrichment that is coming out as cries of foul.
What Trotman said may have sound basis but it was delivered in unprofessional political parlance. The grand take away is that this Coalition is engaging in the same covert behavior that it decried when it was in the Opposition…a takeaway that could have been avoided at the Communications/Public Relations level.
The fact is, Guyana’s natural resources and government –owned service delivery systems are the property of the people; even if there was massive misappropriation of millions of dollars for the failed Amalia Falls project, quiet gifting of land along the country’s defunct train lines, the siphoning of funds and unconscionable compensation for the unqualified engineers in the fiber optic debacle.
Guyanese have a right to know what is being done with their property, as well as, the prerogative to reject the advancement of any argument that suggests a waiting period, before they are told what is being negotiated on their behalf.
There’s a growing disquiet amongst the electorate.
They are now beyond jaded.
Many went to the polls as swing voters, identifying political matters with a transcendent moralism, casting their votes more for moral order than the traditional political ideology and ethnicity. They were tired of being marginalized by a government that flagrantly stole from them, that offered no hope to the generations after them.
The swing vote mattered.
This is political capital that cannot be squandered.
Behind the strategic and tactical problems- not to emphasize the frequent humiliations – things are not coming out right from the Coalition. It’s time for it to sense the limits of its actions, as voter reaction confirms a constantly diminishing yardage of these limits.
People are aware of the discovery of the humongous reserves; know that the harvesting of oil will bring in billions of dollars. Why not give them a sense of how this thing works, an idea of how the contracts are being negotiated?
It is the petroleum contracts that detail the flow of money; that will tell them if Exxon, an investor renowned for rapacious behavior, is not going to hog the revenue from the two blocks…Stabroek and Lisa. There is growing trepidation that Exxon owns 45% of the stake, Hess owns 30% and the Chinese via CNOOC owns 25%. To them that’s 100% of ‘outside’ ownership.
So, tell the people how this thing works, what ownership really means, in this case.
Explain the general parts of the agreement. Let them know, first of all, that the contract will be between the government on behalf of the people of Guyana and oil companies.
Explain that the typical petroleum contract may have hundreds of subsidiaries to it.
Assure them that the contract conforms to the dictates of the Constitution and that the land still belongs to Guyana.
Reassure them that there is built- in environmental protection, biodiversity protection and land conservation – violations of which comprise parts of Exxon’s rap sheet.
Let them know that it is a Production Sharing Contract, that it includes the finding of diesel, butane and petrol as well…that they will all be represented as petroleum in their contract with extractors, that the oil companies will bear the upfront financial burden, pay off their investment expenses, then split the remainder, giving Guyana 50% of those proceeds.
We get that these contracts can be complex, providing for the politics of both government and corporate practices but there is an abundance of empirical evidence that attests to a greater frequency than not of kick backs and payoffs, when transactions are executed in virtual secrecy.
So, answering questions along the way can’t hurt. Moreover, it offers an opportunity for government to let citizens know that it has enlisted the help of proven professionals and the elements of the contract are being discussed on equal footing with these oil magnates …who have designed these contracts… and mostly for their advantage.
The fact is, people are suspicious of outsourcing, engaging foreign countries and conglomerates, offering Guyana’s resources for development because they did not see any benefits or feel the effects of any inflow of revenue, when this happened during the past Administration.
In acceding to power, along with the reins of government, the Coalition inherited a presumption of lawlessness; the image of a government with a Potemkin feel, driven by propaganda and bogus activity, where under qualified and even less suitable staff showed up for work and executed a partisan ideology – much of which steered national gains into individual pockets.
The general sentiment is that elected officials are all corrupt, compromised by the culture of bribe.
And, who can blame them.
Power remains too heavily concentrated in the executive, and, without a robust Judiciary created through long awaited Constitution Reform, the electorate will remain leery of political actions, feeling that there is no real oversight.
This is an opportunity for the Coalition to show that they have chosen the competent ahead of the compromised and that it will go for the upstanding, even if inexperienced.
So stop hemming and hawing…
A refusal to issue contract details, updating upon dramatically changing events, will only cause the Coalition Government to suffer from the twin afflictions of opaque dealings and pernicious intent…not unlike its most recent predecessor.
This new charge for Guyana’s natural resources by these oil titans could become another story of corporate entitlement and government misdeeds or an unprecedented opportunity for economic development.
Oil escalates to a poor country’s most powerful industry – when bad economic planning allows it to subvert other industries …whole other conversation– and is too often allowed to become a parallel government…employing kick back mechanisms and gift envelopes to local officials, to get its way.
We’re not saying that this will happen in Guyana but Exxon, Hess, Halliburton and China’s CNOOC are quite dexterous in these activities and have stood across from various Prosecutors in defense of these activities enough times to be considered pros.
What we are saying is that President Granger, in his eloquent and impressive address to the The Committee on Economic, Social and Cultural Rights (CESCR) at the United Nations on September 28th 2015, spoke of the prodigious potential of the oil find and said that his government’s plans were to ensure that oil revenues reached future generations of Guyana…that efforts to establish a Sovereign Wealth Fund – a state-owned fund established for the benefit of the people, now and future – are well underway.
This lines up with the Coalition’s Manifesto under Natural Resources and the Environment #3: The Fair and Equitable Sharing of benefits arising from commercial utilization of natural resources….
We like the idea of there not being an extractor elite…like there was when logs were being felled by foreigners in our forests.
The promise now is for democratic accountability….
We’re hanging on to that, during this current scramble for the country’s resources…..because the foreign companies that come to the country to make profits never generate wealth for Guyanese….
So far, we’ve only been ripped off.
Reblogged from: http://xpressblogg.com/all-hands-on-oil/
4) Guyana: will its oil boom benefit the people? Al Jhazeera, July 30th, 2018, Video.
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