Advance payments should not be asked for from ExxonMobil, and are unlikely to be obtained in an environment of battered oil prices, which the recent International Energy Agency (IEA) forecast claims will stay low for quite some time. If they are offered, Guyana must make serious concessions to any future oil wealth to secure current advance payments. Exxon is financially weakened with the slide in oil prices. Asking it for money now is a precarious tactic. The world’s most powerful countries (including BRICs) have just announced major investment in clean technology at the Paris climate conference, a move that will put serious downward pressure on fossil fuel demand and prices in the next decade. Exxon is eyeing Venezuela’s oil industry, which will welcome US oil companies if Maduro loses the 2019 presidential election as predicted. Exxon had major investments in Venezuela before Chávez’s nationalisation of foreign oil operations.
The Venezuelan production cost is lower than Liza, which has a break-even cost of $70 per barrel as per the experts. December 6, 2015 could see the opposition return to legislative power and maybe some opening for US oil companies to return to Venezuela. Oil companies will increasingly be looking at parking high-cost extractions.
IEA forecasts pricing around $70 to $80 per barrel for the future without considering the significant events that are taking place now at the Paris climate conference. Anyone seeking advance payments three years from a possible well in this environment is damaging his country’s present and future.
Finally, to date, despite its loud claims of transparency, this government is yet to publicly produce the contract Guyana signed with Exxon, Hess and the CNOOC subsidiary. Minister Raphael Trotman should produce this contract for the people of Guyana to review. This is the property of the people of Guyana, not that of Mr Trotman or the government. Where is the government’s independent study that is checking Exxon’s find? Where is the independent study to determine the potential windfalls and pitfalls from this oil industry, how much we can earn using various scenarios, risks, etc? Where is the regulation to protect our interests?
This is the same haphazard ineptitude we got from the PPP. That is a terrible thing for a country trapped in darkness hoping for some light from this oil find.