Home Letters Granger, Trotman, APNU/AFC got swindled, sold Guyana out
If ever a Commission of Inquiry is needed, the 2016 Production Agreement with Exxon demands one. For the March 2020 election, all political parties must commit to this. That we were bamboozled and swindled is not debatable. The question now is if anyone personally gained. Global Witness is one of several international NGOs calling for an inquiry. More than three dozen local NGOs have demanded an inquiry. The majority of Guyanese want an inquiry.
When Global Witness tells Guyana we have a bad oil deal, that someone or some people signed away, at least, US$55 billion, they said nothing new. For several years now, the PPP and other independent voices have been saying Guyana has a bad oil deal. While the amount is debatable, the conclusion it was a bad deal and that Guyana will lose big has been known long before Global Witness published its report. As Bharrat Jagdeo stated, it could be a little less than US$55 billion, but it could be much more, in excess of US$70 billion. Incidentally, under pressure some months ago, unable to offer a proper defence, Raphael Trotman himself conceded that, in retrospect, it was a bad deal. Guyana Times, Kaieteur News and Stabroek News have been relentless in exposing the giveaway.
Guyanese are smart people. The most ardent supporters of David Granger, Raphael Trotman, and the rest of APNU/AFC concede Guyana was swindled. Some generously insist Guyana was bamboozled because the Granger-led APNU/AFC negotiating team was inexperienced, while others insist the team was just simply stupid. But most Guyanese feel sinister motives resulted in a bad deal. Who can blame people for thinking those tasked with protecting Guyana’s interests were bought out?
Independent, experienced observers and industry experts agree Guyana got one of the worst deals in the history of the oil and gas industry, if not the worst oil deal ever. Global Witness, an independent, British-based NGO, concluded the team that negotiated the deal in 2016 was swindled and did not represent the interests of Guyana. We know that during the negotiation of the deal, Exxon wined and dined the Chief Negotiator, Raphael Trotman, in Texas, at the Exxon Headquarters, first-class air tickets, limousine rides, top-rated hotels and restaurants. Each of us can judge the meaning of these facts.
The 1999 Janet Jagan Exxon Exploration licence had expired in early 2016. That exploration contract merely allowed Exxon to prospect for oil. That license paved the way for the discovery of oil by May 2015. By May 2015, the circumstances had dramatically changed. No longer was Guyana begging anyone to explore, Guyana was a sought-after oil destination. By the time 2016 came, Guyana was acclaimed one of the biggest new oil reserves in the world. Guyana had all the advantages on her side.
There were no provisions for an automatic extension of the 1999 exploration licence and Exxon was due to return 75 per cent of the license prospecting territory. Exxon was in a weak negotiating position; Guyana had all the cards in her hands. Instead, the Granger-led APNU/AFC, through Trotman, not only hastily extended the 1999 terms, he renewed it with terms and conditions more favourable to big oil than when Guyana was begging for big oil to come. Trotman and APNU/AFC used an illegal “bridging deed”, allowing Exxon to automatically have a new exploration licence and to move into a production licence. We were either swindled or bought out or maybe both swindled and bought out. Each of us can decide which of these possibilities happened. Without an investigation, we can only surmise and guess.
There was a reason the PPP signed only an exploration licence with big oil, with an expiry date. The PPP wanted to ensure that any generous terms and conditions intended to entice big oil to Guyana for exploration did not automatically extend into the production phase, should that ever materialise. The use of the secret “bridging deed” by APNU/AFC, through Trotman, was the first wrong. The generous conditions after that not only compounded the wrong, but transformed the wrong into something unholy. The US$18 million signing bonus is an insult. For much less, Brazil got US$726 million and Suriname for even much less got US$100 million as a signing bonus. We were royally swindled. Or were we bought out?
The production agreement giving Guyana 2 per cent royalty, when industry standards exceeded 7 per cent and reached as much as 30 per cent, not only amplified the swindle but seriously raises worrying questions beyond stupidity and incompetence. Is it unreasonable for the average Guyanese to suspect people were bought out? It is beyond reason to think Guyana’s negotiators were that stupid. It was APNU/AFC that boasted Trotman was the most suitable person to lead the negotiation, given he was a senior lawyer and had a month-long negotiation course at Harvard. Trotman does belong to arguably the most incompetent Cabinet in Guyana’s history. But to accept 2 per cent royalty when hundreds of such agreements reveal royalties of greater than 7 per cent appears beyond incompetence and stupidity.
Guyana has racked up pre-production cost of more than US$11 billion, a sum Guyana must refund to Exxon. This money will have to be taken out upfront from total revenues before any profit can be assigned to Guyana. Trotman agreed that Exxon could pay itself back from the first 75 per cent of total annual revenues. This means that Guyana can expect no more than 12.5 per cent of the profits for several years to come. But then, incomprehensively, Guyana agreed to pay all income taxes and corporate taxes on behalf of Exxon from Guyana’s profits. Guyana’s expenses for monitoring operations also will come from our profits. In addition, Guyana is responsible for environmental control and clean-up, from our profits. This reduces our maximum profits to far less than 12.5 per cent in the first few years. Truly this is a brazen swindle.
Far from exposing APNU/AFC, Global Witness merely affirmed what the PPP, other independent voices and the three daily newspapers have been saying for several years. The dishonesty of APNU/AFC is that they knew any credible investigation would discover the unholy swindle. Long before Global Witness had completed its study, the Guyana Government knew what the results would be. They spent taxpayers’ money to hire another global company, since September 2019, to prepare a report to spin the Global Witness results they expected. The expensive spin doctors have not been able to soften the blow because a swindle is a swindle. Trotman and APNU/AFC betrayed the Guyanese people. What is left for us to prove is whether the swindle was a result of incompetence or that someone or some people were bought out. An independent Commission of Inquiry is imperative.
Dr Leslie Ramsammy