Guyana rejects claim country could lose billions in ‘exceptionally bad’ oil deal

Guyana rejects claim country could lose  billions in ‘exceptionally bad’ oil deal

GEORGETOWN, Guyana--The Guyana government has defended its oil licence agreement with US oil company ExxonMobil in the face of what it called a “random, arbitrary and highly speculative” charge by international and anti-corruption group Global Witness that it made bad deal that will cost it US $55 billion.

  And it has alleged that the report by Global Witness is an apparent attempt to seek to influence the outcome of the March 2 general and regional elections.

  In its report published on Monday and entitled “Signed away: How Exxon’s exploitative deal deprived Guyana of up to US $55 billion”, Global Witness said the oil company’s aggressive tactics with “inexperienced” Guyanese officials resulted in an agreement that will cause the country to lose out on billions that “could be used to build much-needed roads, hospitals, schools and sea defences to protect the 90 per cent of the population at risk from rising sea levels.”

  Global Witness insisted that the government should have got more from the deal, and recommended that the David Granger-led administration renegotiate the agreement to get more money from Exxon, while at the same time advocating that it should halt drilling in the offshore Stabroek block where Exxon operates.

  Exxon had a licence for the Stabroek oil reserve off the Guyanese coast in 1999. And Global Witness claimed that after finding oil off the coast in 2016 – one of a series of finds that would make Guyana the world’s newest oil hotspot – it rushed to get renew its licence that was “old, shrinking, and would soon expire”.

  It said Exxon violated its own policies when it paid for Guyana’s Natural Resources Minister Raphael Trotman to take a lavish trip to the company’s Texas headquarters, complete with a first-class flight, a stay at an expensive hotel and meals at an exclusive restaurant. However, it did stress that it was not suggesting that the minister’s trip violated US or Guyanese anti-corruption laws, neither was it alleging that Trotman, who was part of a Cabinet-approved government delegation, deliberately negotiated a bad agreement or deliberately ignored information that would have got Guyana a better deal.

  But in a statement issued on Tuesday, the Guyana government called the report “sensationalist, agenda-driven and extraordinarily speculative”.

  “The government of Guyana views the report as a cunning and calculated attack on a sovereign state with a duly elected government mere weeks before an election. This timing cannot be seen as a coincidence and it appears as though it is seeking to influence the electoral outcome,” it said.

  Reacting to the Global Witness recommendation that it should allow no additional drilling in the Stabroek block and also cancel its nine other allocated licences and not award any new licences, the government said: “This is arbitrary and utterly absurd. On what basis does Global Witness seek to impose its proposition that the people of Guyana must not benefit from our natural resources as the peoples of other countries have done freely for millennia?”

  The government insisted that it entered a fair agreement for the people of Guyana and that has been supported by other credible international agencies. It said the benefits of the deal include: 50 per cent profit oil; two per cent royalty; withholding taxes; a US $18,000,000 signing bonus; over 1,900 persons directly employed in the oil and gas sector to date; over US $300 million in foreign direct investment to date; and over 700 service providers to date.

  “The government maintains its position that there were geo-political and national security imperatives which could not be ignored. The report deliberately seeks to trivialise the national security and sovereignty of Guyana. Further, Global Witness completely ignores the analyses and reviews done by credible companies such as the Norway-based Rystad Energy and experts including Sir Paul Collier of the prestigious Oxford University,” it added.

  Rystad Energy, a widely respected oil and gas analytical firm, has estimated that the two per cent royalty and 50 per cent profit oil levy will give the government 60 per cent of the profit from the various projects, and that is favourable given that for countries that only recently opened up for exploration and production activities – such as the Falkland Islands, Israel, Mozambique and Mauritania – the government take is in the range of 50 to 65 per cent.

  To further support its position, the government noted that in response to the Global Witness report, leading financial publication Forbes Magazine stated that “just a few hours of analysis reveals the Global Witness report for what it is: an ideologically-motivated attack piece aimed at some of the biggest players in the oil and gas industry.”

  The government also stressed that the Global Witness was unable to establish any corruption or malpractice whatsoever on the part of government, and that at all material times, government officials acted with the knowledge and authority of the Cabinet and on the basis of credible advice.

  “Not having been able to establish any corruption, Global Witness then pivots and engaged in a flight of fancy. The figure of $55 billion is random, arbitrary and highly speculative. In fact, the people of Guyana are assured of earning tens of billions of US dollars in the years ahead and would have unprecedented and bountiful amounts for investment in their wages and salaries, pensions, education, health care, security, infrastructure, sea defence, agriculture, hinterland development and for future generations through Guyana’s already established Natural Resource Fund,” it said.

  The government insisted that it had acted decisively in allowing for first oil to have been celebrated in less than five years, which it said was an unprecedented and historic achievement.

  “All Guyanese are imbued with a deep sense of pride and patriotism that they are now citizens of an oil-producing nation and are urged not to allow anyone to steal their joy and good fortune,” it added. ~ Caribbean360 ~