Every citizen at present owes ExxonMobil $9M – IEEFA Financial Analyst
- each new discovery,is more debt for the nation
By Gary Eleazar
Kaieteur News – For every US dollar that Guyana earns per barrel of oil produced in the Stabroek Block, the Oil companies walk away with six dollars.
Compounding the situation is the fact that at present, given the developments already undertaken and underway, each citizen of this country owes the oil company some US$44,000.
Additionally, at the rate Esso Exploration and Production Guyana Limited (EEPGL)—ExxonMobil Guyana—has envisaged the developments, the ones already identified would see the country repaying ExxonMobil at least US$75B to develop which would mean that the country would be repaying debts on that amount until 2070.
This situation is likely to change, since the rapid pace of discoveries would also lead to the rapid increase in debt.
These are among the conclusions of Tom Sanzillo, Director of Financial Analysis for the Institute for Energy Economics and Financial Analysis (IEEFA), who during a public webinar yesterday delved into the financial burdens Guyana has been left in as a result of the lopsided arrangement with EEPGL and the Government of Guyana under the Production Sharing Agreement. The webinar was hosted in view of the fact that the Environmental Permit for the Liza 1 Development expires next week on May 31.
According to Sanzillo, the Guyana government through the Environmental Protection Agency(EPA)–which is the state entity responsible for renewing the permit or not—should use the situation as leverage to address the numerous shortcomings in the contract.
He told attendees at the webinar, unless this is done, then the renewal of a permit with no additional restrictions and financial reforms would simply see the renewal process as a rubber stamp arrangement.
The lopsided arrangement alluded to by Sanzillo is another in the long list of abuses of Guyana.
Elaborating further, Sanzillo reminded that this year Guyana has for the first time used its oil revenue in its budget and while the leaders are touting new revenues they have not addressed the increased cost of production and the fact that each Guyanese is currently on the hook for some US$44,000, “this is what is owed now.”
He used the occasion to posit that what each resident must pay is bad enough and that using all of the oil resources in the budget in order to fund a 37 percent increase in spending adds insult to injury. According to Sanzillo, the Guyana government is currently spending more than it is earning and reminded that the country has had to borrow billions, each year.
The Financial Analysts used the occasion to remind that while Guyana had agreed with the International Monetary Fund to use its oil resources to achieve certain specific results such as closing the deficit and saving for the future none of this is being achieved. Instead, what the government is doing is spending more than it earns in what is already a bad deal, made worse by the poor management of the resource.
To this end, he posited that if the government fails to change the deal it would have failed the people of Guyana. As such, he was of the view that Guyana may never see its fair share of earnings from its oil blocks and as such pressed for government to open up its books in order for the people to be able to determine the state of affairs.
According to the IEEFA Financial Analysts, “We are not the only ones saying that this is a bad deal for Guyana” and reminded that stakeholders from around the world have been saying the same thing. With this in mind, he noted that in recent days there are regular announcements made of new discoveries and it is being seen as a positive thing.
According to Sanzillo however, under the present arrangement every time he sees an announcement of a new discovery, to him, that just means the mountain of debt will pile up before Guyana can get more earnings from its oil fields and reminded that with US$75B to develop what is already planned, that would take until 2070 to pay back.
With this in mind, Sanzillo said, “Our concern is that Guyana will never see the revenues it was promised.”