Guyana Government’s Position That Approval Of The Payara Oil Well Is Not A “Make Or Break” Moment Will Cause Loss Of Billions

exxon-payara-development
Exxon/Hess Payara development
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By Dr. Jerry Jailall

Special to News Americas

News Americas, ATLANTA, GA, Mon. Sept. 21, 2020: While some of our politicians in Guyana continue to divide nationals by inciting racial riots, Exxon is laughing all the way to the bank, wallowing in enormous profits from the first oil well called Liza 1 in Guyana.

Exxon is now seeking approval for a new oil well called Payara, in the Payara oil block. Despite all the experts advising that Guyana should use the approval of the new Payara oil well as an opportunity to leverage a better deal with Exxon going forward, the new Guyana government through its chief spokesperson, Vice President Bharrat Jagdeo, at a recent press conference, said the Payara approval is not a “make or break” moment for Guyana.

True, it was the A Partnership For National Unity’s (APNU) Raphael Trotman that rushed to sign a very bad agreement, rejecting advice given by its advisory team. The Peoples Progressive Party/Civic, (PPP/C), must not rush down that same road repeating the APNU’s mistake and reject good advice given by many, including our indomitable major newspapers, and the Oil and Gas Governance Network (OGGN), comprised mainly of Guyanese living abroad.

It is important that the Guyana government’s position indicates that it will not just follow the beat of its own drum and ignore anyone else. During the  recent press conference, Mr. Jagdeo said while Exxon and the Government of Guyana do not see eye to eye on issues related to the Payara license, “…I don’t see this and the government doesn’t see this Payara as the make-or-break.”

If we don’t renegotiate now, when? After we rush into another bad deal? We need to maximize our benefits from each and all of our wells.

The VP also added: “We don’t favor flaring. We’re opposed to flaring. And secondly, we believe that any water discharged, whether reinjected or discharged must be treated to international standards… .”

But these are generic positions. We see this as a continuum. Exxon is not going to disappear tomorrow. The Payara license is not the only opportunity that we have to get what the President said we wanted, and what the PPP campaigned on, which is an industry that benefits the investor, but significantly benefits the Guyanese people through jobs, business opportunities, etc…

There are numerous opportunities in this continuum. The added there will come a time when the government will hold discussions about local content and related legislation. He also said there would be another negotiating opportunity when talks are held about the development of gas fields, the price for gas, how much of it comes onshore, and how it will benefit the people, and that the government is eager to engage in a discourse on training opportunities for locals.

The Guyanese nation understand this, but the biggest benefits from oil come from the royalty, the profit sharing, Exxon paying taxes which they don’t now, and efficiently auditing the costs submitted by Exxon to make sure we are not getting robbed of $US billions through inflated expense reports.

These are the high-end items if there is a continuum. The local content is important, but that’s not where the biggest gains come from and it is not a substitute for better royalties or profit share. The biggest beneficiaries from a better local content policy would be the middlemen businesses, not the poor people of Guyana.

The trickle-down effect from local content is not as huge as if we were to renegotiate for a better royalty, profit share, requiring Exxon to pay taxes in keeping with our tax laws, or pay for all oil spills. For every 1% increase in royalty, at US$50 per barrel, we stand to gain an estimated US$4 billion. That’s more than you can get on a better local content policy, which simply refers to Guyanese companies getting some of the oil related contracts for goods and services, and Guyanese getting oil jobs and training.

The government must understand that getting the maximum benefits for our poor, destitute people, is not a multiple-choice question where the answer is A, B, C, or D. The answer is “E” – “all of the above.”

This notion of a “continuum” seems to be an inappropriate answer to the call for renegotiation. We urge the Guyana government to be unwavering and unequivocal to renegotiation that includes: higher royalties; higher profit share; Exxon paying taxes, and amendment or removal of the stability clause; efficient auditing of oil expenses claimed by Exxon; clear agreements that Exxon pays for oil spills not recoverable from our profit share; strict penalties for flaring, oil spills and release of polluted water and better local content.

I ask all Guyanese – locally and globally – to “speak now or forever hold your peace.”

Speak up now and let’s back the legally elected government as it stands up to Exxon for the people of Guyana. As I said before, if the contract is renegotiated or not, the political and business elite will still live large and have the good life. The rich will get richer, and the poor will get poorer.

Please sign the Oil and Gas Governance Network (www.oggn.com) petition now, calling for renegotiation of the Exxon contracts. Go to https://www.change.org/Guyana_oil_contracts_need_renegotiation

EDITOR’S NOTE: Dr. Jerry Jailall is an Education Consultant at the North Carolina State Department of Public Instruction (NCDPI), North Carolina, USA. He has served in education for 25+ years at the elementary-, middle-, high-, and university levels in Guyana, the Bahamas, the USA and the United Arab Emirates. Dr. Jailall holds five degrees and several certifications in education, has written chapters in books and journal articles, and is Co-author of a Corwin Press bestseller, The Principal as Curriculum Leader: Shaping What is Taught and Tested.