SAD TO SAY


It is sad to say that the Global Witness report, “Signed Away,” analyzing EEPGL’s (the ExxonMobil controlled Esso Exploration and Production Guyana Limited) agreement with Guyana and the damning circumstances leading up to its signing, will not influence the vote of more than a handful of people, if so many, at the elections on March 2. The report’s main conclusion is that: “Evidence….suggests that Guyana got a bad deal because it may not have been well represented in subsequent negotiations by Minister Raphael Trotman and his team.” The report suggests that “Trotman presented Exxon with feeble negotiation terms and ignored expert advice that more financial information was needed before he signed the licence.”

Exxon was poised to announce the results of its analysis of the Liza 2 well by the end of June. If Guyana had awaited the results, as advised by hastily consulted experts, Guyana would have been in a stronger negotiating position. Shortly after the signing, Exxon announced that Liza 2 had 1.4 billion barrels of oil. To be fair to Minister Trotman, he has said that: “I am in a Cabinet of Ministers and before the contract was signed I was duly advised and duly instructed to sign it.”

It is clear from the report that the Government sought no significant technical advice. Exxon fielded a large team in the negotiations while Guyana was represented by three GGMC officials with no experience in negotiating production agreements. GGMC’s petroleum unit is experienced in negotiating prospecting licences for petroleum exploration. These, by and large, contain standard terms. While GGMC would have been aware of what production sharing agreements should contain, it probably never faced as formidable a team as Exxon’s. But it was the Government’s call, not GGMC’s. The terms appear to be those that were proposed by Exxon, even though the GGMC officials had sought a higher royalty.

The report concluded that Guyana was shortchanged because Guyana would gain 52 percent of oil revenues, while OpenOil, which was a consultant to the report, suggested that Guyana’s share ought to have been 69 percent. Quoting an IMF survey, it suggests that for oil licences, a normal government share would be between 65 and 85 percent. OpenOil concludes that had Guyana received its fair share of the profits, it would have earned US$55 billion more than it would currently earn, assuming oil price is at US$65 a barrel.

The Government commissioned its own report by Clyde and Co., a British law firm. Like Global Witness, Clyde and Co. concluded that the 2016 agreement was “in accordance with the Act and Regulations.” However, Clyde and Co. also concluded that the agreement was hurriedly completed, negotiations being “limited’ to one month, Exxon having rejected the proposals offered by the Guyana Government. These conclusions are reported by the media as the report has not been released.

While Clyde and Co. agreed that “it is understandable why the protection of Guyana’s offshore oil and gas activity in the face of military action by Venezuela became an urgent matter of national security, and in turn why decision-making in relation to these issues was elevated to higher levels such as the Ministry of Foreign Affairs,” it is not known whether it justified the hasty signing of the agreement because of this reason, as has been argued by the Government.

The report suggested that seeking better terms by extensive negotiations was not an approach that was “in the forefront of the Government’s mind.” It would also be of importance to learn whether this report contains any defence by the Government of the terms of the agreement on the ground of Guyana being a “frontier” development country, where terms are less favourable because of uncertainties. The Government appears to have accepted this and other arguments by Exxon which “was not receptive to the amendments proposed” by the Government and GGMC.

We are yet to grapple with the effect of the Bridging Deed and related documents, seen and unseen, which have been the subject of commentaries by Mr. Christopher Ram. He argues that the prospecting licence had expired and could not be revived, which the Bridging Deed appeared to have done.

Guyana’s ethnic-driven politics, and the more than half a century struggle for ethno-political dominance, have resulted in policy issues, whether of the important oil industry or otherwise, as being of secondary importance as to which race rules, to put it crudely. The main concern of most of Guyana’s two largest ethnic groups is who will eventually obtain the winning numbers on election day, to enable the domination of all political space for the next five years in a Westminster, majoritarian system, that promotes absolute rule, subject to the minor, formal, windows of opening provided to the Opposition by the Constitution and the National Assembly.

Guyana needs to remodel or refashion its constitutional system of governance to create an effective democracy that contains and transcends the struggle for ethnic dominance and enables the full, creative, daily, expression of the will of the Guyanese people. By the electorate expressing its will by elections and through other democratic means, without jeopardizing its community of shared, rather than, dominant interests by shared governance, Guyana will have a more cohesive society capable of unitedly protecting the nations’ resources.

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