If the current phase of oil exploration in Guyana was handled skillfully in the 2016 Granger/Trotman-led negotiations, it would have offered a unique opportunity to alleviate poverty. The royalty and tax structure of that agreement did a great disserve to the Guyanese people and now we are cut out from a broad-based development plan that would have actively and directly improved living standards across the country within the medium-term.
After all, the minimum the Guyanese people were expecting from this oil and gas development is adherence to the Constitution. As clearly outlined in the preamble, WE THE GUYANESE PEOPLE are prepared to “forge a system of governance that promotes concerted effort and broad-based participation in national decision-making in order to develop a viable economy….” But there is very little that is viable for Guyana from this 2016 Granger/Trotman oil and gas contract. The only people this contract serves in the small Granger cabal and the international contractors. Isn’t this almost imperialist plunder with local political poodles to do their bidding? Something must be done and soon.
Is mass protest action by the people against this one-sided contract an option until it is re-negotiated by following global best practices? It is my conviction this might be the only option left to bring attention to this abuse of the people by the Granger cabal and the oil contractors. The bigger the street demonstration, the quicker this contract can be brought back to the negotiations room and a better deal offered to the people.
It is not right and grossly unfair to the people that these finite Guyanese resources are not being put to use so that all sides can win. If one reviewed the data on the US stock markets, between the dates when the oil discovery was announced in Guyana in 2015 to the date this contract was signed in 2016, the valuation of the EXXON stocks went up by US$24,648 million. Guyana saw US$18 million of that cash or 0.07 per cent of the new wealth recorded on the contractor books. This certainly is not a win for the Guyanese people, compliments of the Granger Cabinet. There must be some lessons we can learn as we renegotiate this skewed 2016 Trotman/Granger oil and gas agreement?
1. We must have laws that uncover all of the real owners of the companies that are working in the oil and gas sector, especially those who are given the local content contracts and including the sub-contractors to ensure the politician are not drawing from both sides. It was reported to me that the wife of a Minister is on a G$30 million a year contract with one of the developers? How is this possible when her qualifications are in childcare management? Is this why the President made the decision to set up an oil department in the Ministry of the Presidency?
2. The citizens of Guyana need to know how much oil is extracted from the well on a daily basis. In Nigeria, some 40 per cent of the oil production is illegally smuggled and sold into the black market by the very same international companies. This is very easy to do if the well is offshore out of the sight of the citizens. To avoid this, the contract must be amended to give us permanent monitoring and auditing capabilities of the production process and this must become mandatory by Guyanese law so that no Government present or in the future can waive this requirement.
3. This contract really shortchanged Guyana because the contractors have the right to, in accordance with Article 14 of the contract to “use as much of the production as it may need for its petroleum operations” and “transportation and terminal systems”. All these quantities shall be excluded from the computation to determine Guyana’s Oil Entitlement (value or in kind). If the royalty was 10 per cent, then, of course, Guyana can afford to pay for all of these items, but at two per cent, it means the net value-add on top of the two per cent will be materially reduced.
4. If the Minister is unable to market Guyana’s oil entitlements, the developer will charge Guyana a marketing fee to be deducted from the payments due to Guyana and the Minister can only exit such a situation after giving six months’ notice. Again another cost to the nation compliments of Trotman. History will show that when the oil companies overestimated their cost by just a few pennies in Alaska in the 1980s, they were able to increase in their profits by billions of dollars to the detriment of the State of Alaska. If they can nail America to the cross, whom else will these companies not mount?
In the final analysis, this 2016 Trotman/Granger oil contract must be renegotiated.
