Monday February 17, 2020
PAGE 9
Kaieteur News
Citizens will have to settle for a salt and rice dinner while the oil companies enjoy a four-course meal Guyanese will have to settle for a salt and rice dinner while the oil companies enjoy a four-course meal, compliments of the US$ 55B which Guyana left on the negotiating table. It is no wonder that Global Witness titled its report “Signed Away” because this is exactly what Guyana has done. It has signed away the peoples’ birthright. The US$55B is conservative. It is based on an average oil price of US$65 per barrel. Oil prices we have been known to have risen above US140 per barrel. In 1998, the average price was US$ 11.91 per barrel. Ten years later, in June of 2008, oil prices peaked at US$146.91 per barrel. The price of US$65 per barrel is therefore a fair price from which to base calculations as to what Guyana would have obtained had the country negotiated better terms, such as a 10% royalty and a 25% taxes on profits.
OpenOil has calculated that based on an average price of US$65 per barrel, the country has robbed itself of US$55B because of the terms it negotiated. But this is at the lower end of the simulations because as the price of oil rises, the amount which Guyana would have given up also increases. If the price of oil rises to an average of US$80 per barrel – not at all an unrealistic development given what is happening to shale production at the moment – then Guyana would have given up some US$73B. Even if the price of oil falls to an average of US$50 per barrel, it is estimated that Guyana would have denied itself US$ 38 B in revenues. This is not make-believe money. This is money which could make every Guyanese comfortable for the rest of his or her life. It is also not the case that because Guyana gave up such a humongous sum, that no one benefits. This US$55B will go into the
pockets of the oil companies and their stockholders. Guyana is already saddled significant pre-contract costs along with field development costs which totaled more than US$ 1B even before a drop of oil was pumped. OpenOil calculates exploration costs at US$0.94 per barrel. Capital expenditure works out to US$ 11.58 per barrel. Operating expenditure works out to US$ 10.98 per barrel. The total costs per barrel works out to US$23.50, excluding financing costs. Exxon and one government spokesperson have tried to justify the low royalties and overtly generous concessions on the grounds that Exxon was taking a risk given that oil had not been found in Guyana prior to 2015. As the report noted, however, the discoveries in 2016 alone effectively de-risked the Stabroek Block. OpenOil calculates that the oil companies will obtain an internal rate of return of
Deeper focus on findings of Global Witness Report comes with great risk - Chatham House Fellow Associate Even though the controversial Global Witness Report called “Signed Away” calls for further investigation into the award of previous and current offshore licenses, caution must be taken to ensure Guyana does not lose focus on other important issues. This was recently noted by Chatham House Associate Fellow, Dr. Valerie Marcel during her first appearance on Kaieteur Radio’s Programme, Guyana’s Oil and You. There, Dr. Marcel was asked if she agrees with the report’s call for further investigations to be conducted. To this she responded, “Yes and No.” The Associate Fellow said, “I think the investigation that they (Global Witness) put together didn’t show really, an abuse of power or corruption that would really send all the red flags flying. I think it’s important to know if there was any wrongdoing or intended mishandling, but I don’t think they proved that point or made the case.” Dr. Marcel said too that there is a risk that whatever investigation is undertaken by whichever party, it is being discredited as a means to counter one’s opponent. She said that there is a bigger risk that this distracts one from bigger questions. The Chatham House Associate Fellow said these include how the government is preparing for the production phase, how the government is preparing for spending this money, how the
Chatham House Associate Fellow, Dr. Valerie Marcel government is managing the economy, and how the government intends to oversee operators and ensure mistakes made in the past are not repeated. Dr. Marcel said, “It seems to me that would be a more constructive focus than really indepth investigations of mistakes that by all indications were not intentional.”
No Coroners appointed in four... From page 8 had ordered an inquest into the March 15, 2018 fatal shooting of Dextroy Cordis, known as ‘Dutty’, 46, of Grove, East Bank Demerara; Kwame Assanah of Buxton, East Coast Demerara and Errol Adams, called ‘Dynamite’, 57 of
Dartmouth, Essequibo Coast, along the Kingston seawall, in Georgetown. The men, who were described as suspected bandits, were fatally shot by police north of the GNS Sports Ground after police said they opened fire on them while they were in an anti-
crime patrol. Last year September, via a newspapers publication, the Registrar of the Supreme Court requested that five witnesses appear at the Linden Magistrate Court on October 11, 2019 to testify in the inquest into the deaths of Moses and Prince.
22%-27% on their investment. By industry standards, this is extremely healthy. Were Guyana to renegotiate a 10% royalty, the rate of return to the oil companies would still be a healthy 18%-23%. Therefore, the oil companies can afford to return to the negotiating table and give Guyana a better deal. Global Witness has called for the Guyanese government to renegotiate the oil contract. It is a call which every single Guyanese should echo. It has also called for the Guyanese government to
investigate the process by which the Stabroek license was negotiated. It is not expected that this is going to happen under the present government because it will open a “can of worms”. Global Witness has also called on the US State Department to support Guyana by encouraging Exxon to renegotiate the Stabroek contract. The corruption watchdog organization feels that the US government should force Exxon back to the negotiating table. Global Witness believes
that Guyana can negotiate a better deal. It feels this is possible given how important the production license is to the company’s future. In other words, Guyana has some leverage to force Exxon to the negotiating table. The present deal is unacceptable. No selfrespecting people should accept such a deal. It makes a mockery of the term “negotiations.”