Advance from ExxonMobil, a risky business – Jordan

…says Guyana lacks capacity to manage influx of money

With the unpredictability of the global oil market and a standstill in Government spending here in Guyana, Finance Minister Winston Jordan has opined that taking an advance in oil revenue from US oil giant ExxonMobil to stimulate the economy would be nothing less than risky business.

Even as the country grapples to improve its economy, a revenue advance from the oil and gas company at this time, in order to fuel growth could do more harm than good for Guyana.
The Texas US-based company is awaiting its production licence, which Government is in the process of finalising. And while the economic prospects are bright for both parties, taking money upfront will not be a good idea.
Jordan on Monday said there really was not an issue with the availability of funds in Guyana, but the actual spending of those funds.
“There is no sense going and take advance on potential revenue that will be had post 2020, because you will not be able to spend it in the open and transparent manner in which it should be done. So to me that is not an issue right now, beyond the fact that you have to weigh carefully taking advances on potential,” he told journalists.
Jordan said there was always a risk in such moves, citing a similar case in Ghana, where that approach had been taken and backfired. That country, he said, found itself in deep debt after.
“You have a lot of things; you know the oil market is a very volatile market and you might predict that you will have a certain amount today and the revenue you will get is so much revenue. But you don’t control those prices; you are too small, you are not a player,” he noted.
Jordan said it would be a severe risk the country would be taking and it could be saddled with debts overnight that it could not pay and eventually it would be declared bankrupt. He said too that Guyana lacked the human capacity to accommodate this new influx of money. In this regard, he reiterated that oil could be a curse.
“We have a system that is not geared, that does not have the human capacity and if we have all this money coming in then you can expect a collapse. We have to fix the system now.” Asked how Government plans to do this, the Finance Minister said it would be focusing on the human resources.
“The focus should be on key ministries now where this spending is really a block. We will try to bring in and reallocate personnel to concentrate on areas where you are not getting much movement.” He said Government must continue to work on fixing the system.
Exxon and its partners, Hess Corp and CNOOC Nexen, made the first significant oil find back in 2015 after drilling the Liza Field in the Stabroek Block located about 120 miles offshore Guyana.
The oil company is currently in the developing phases of the Liza field, with oil production projected for 2020. By that time, the oil company is expected to invest some US$5 billion.