Opposition Leader demands full disclosure on Exxon Contract

…says 2% royalty brings real possibility of Guyanese being worse off 

Two per cent royalty at US$50 per barrel of oil will see Guyana earning a meager $8B per year from Exxon Mobil, returns that can in no way solve Guyana’s unemployment problems and in fact gives rise, to the real possibility of Guyanese being worse off, since many of the traditional sectors are currently being neglected by the Administration.

These were among the scathing observations by Opposition Leader Bharrat Jagdeo, who on Friday called out the government over its duplicitous statements and challenged the David Granger-led Administration to release the contract it is inking with the US-based oil exploration company.

Jagdeo said he did not want to speculate but has observed statements by Minister of Natural Resources, Raphael Trotman to the effect sections of the original contract had not been altered.

“Which part have you opened for renegotiation and why and are you renegotiating…If we don’t know the baseline, are you negotiating more favourable or worse conditions.”

Jagdeo used the occasion to again accuse Minister Trotman of politicking with oil and possible oil revenues, since according to Jagdeo, he has now intimated that the current Administration negotiated a better contract at two per cent more, than the one per cent negotiated by the PPP/C.

The former President sought to defend the original contract saying it has to be seen in the context that at that time, the then administration literally had to be begging companies to explore in Guyana.

“It was signed at a time when we were begging people to go explore out there,” Jagdeo recalled.

According to the former President, now PPP General Secretary and Opposition Leader, “In absence of making entire contract public we think he (Trotman) is just cherry picking and if you gonna snipe at the PPP then make the entire contract public.”

Royalty

Meanwhile, as it relates to the earnings to be had from Exxon Mobil, the opposition leader was adamant that with traditional sectors being neglected and a modest projected guarantee return of about $8B a year, that cannot solve Guyana’s jobs problems.

Moreover, he said, the agreed to royalty rate should have been presented to the public with international comparisons. This, he said, obtained at the time when the Royalty was being determined for the Omai Gold Mines Operations.

Jagdeo said the current administration has not presented any data to the public and questioned too how exactly the profit sharing arrangement would work.

The opposition leader is of the view that come 2020, Guyana could very well receive nothing from its oil since Exxon Mobil will have to recover its investments first before any oil profits can be determined.

He recalled that pronouncements by Exxon Mobil suggest that by 2020 it would have invested some US$5B.

At the projected 100,000 barrels per day, Jagdeo said this works out to only $8B in guaranteed returns for the country and this has to been seen against the backdrop of secret deals being made by the APNU/AFC administration that places the treasury at risk.

He identified a transaction with Demerara Distillers Limited which he insists placed the treasury at risk for about $80B.

According to Jagdeo, there is a very “real possibility of Guyanese being worse off” come 2020….”oil could be a blessing or a curse.”

“What he (Trotman) does, he goes around talking up the future of this industry as though it will solve every problem in Guyana…As though there will be massive flows.”

Government announced on Thursday that Exxon Mobil and its partners will pay Guyana a two per cent royalty on all oil extracted offshore Guyana from is wells, in addition to sharing 50 per cent of the net profits—profits declared after the initial investments would have been repaid from any earnings.

According to the Ministry of Natural Resources, the administration is preparing to issue a Production Licence to Exxon Mobil as one of the requirements before the developers make their Final Investment Decision (FID) for the project in June 2017.

Extraction from the Exxon Mobile Liza field is expected to commence in 2020 at an initial rate of 100,000 barrels of crude per day in the first phase.

The operation is expected to commence with a Floating Production Storage and Offloading (FPSO) vessel providing the main infrastructural support for the project.

Source: inewsguyana