Oil, politics and Trotman

Please excuse me if I am jaded by all the talk about our petroleum largesse and the good life it is supposed to deliver. I have seen what has happened to others who have oil, been hearing about our oil Eldorado for a long time, have a good appreciation of our political context and this government has imbued me with very little confidence that it has a sufficiently holistic understanding of the sector and its national and geopolitical context to maximize the promised good life for all of us.

Guyana has an estimated oil reserve of about 3 billion barrels. Our contentious neighbour Venezuela has 100 times that – 300 billion barrels, the largest oil reserves in the world – a substantial petroleum history and yet has its people scattered around the region struggling for existence! It matters not if you are for or against the existing Venezuelan government; there is little doubt that given its size and location its politics are wrong. It has been unable to sensibly link the wellbeing of its people with its ideological aspirations. Guyanese have had to face similar problems, which the mature Cheddi Jagan wisely confessed were due to ‘youthful exuberance.’ However, to this day our politics have not been fixed and if anything, appear poised to usher in another interval of political turmoil!

The second reason for my cynicism has to do with the lengthy gestation between my first excitement about the existence of oil, the promised good life and the political machination that may have caused it never to materialize. At an executive committee meeting of the PNC in about 1976, Forbes Burnham distributed some small bottles of Guyana oil, which, if I remember correctly, was found in the Takutu Basin in what is now Region 9. The discovery was reported worldwide and the substance was said to be so pure that you could almost immediately use it to power some engines. About the same time, in January 1976, Forbes Burnham surprised many when in his New Year’s report to the nation he claimed that the PNC was ‘inspired by the scientific socialist principles of Marxism and Leninism’! Not too long afterwards, the news came that the find was not of commercial quantity, the well was capped and the oil company disappeared! Immediately after independence in 1947 when it began to dally with radical socialism India had a similar experience which led to its having to nationalize the oil industry in about 1960 and seek Soviet bloc help for its development.

The third reason for my being cynical is the clear evidence that our politicians are being rolled over by big oil. No Guyanese could feel good upon hearing that while the range for royalty in the global oil industry is between 10% to 20%, our negotiators of the most recent petroleum agreement with Exxon only managed to get 2%. And while we should be receiving a signing bonus of between US$200m to US$400m, we have only been able to get US$18m. And even when our negotiators had our law at their backs, they gave away 600 exploration blocks instead of the 60 for which the law provides. And Exxon/Esso failed to provide plans for training and hiring of local staff and for the procurement of Guyanese goods and services as our law required. And our minister must give the company 7 days’ notice before he can visit the rig even at his own expense, and the list goes on. Even the regime’s staunchest supporters are shaking the heads in dismay as it proceeds to assault their intelligence by daily publishing previous contracts signed by the PPP/C when conditions were substantially different, and also thereby suggesting that doing the foolishness the PPP/C intended to or did do is an excuse for one’s own folly. Given this government’s penchant for investigations, an impartial one would go a long way to quell public disquiet, but the most one can expect in our context is the reassignment of tasks, as with GuySuCo and petroleum.

My fourth concern is that I am yet to be convinced that amidst all the excitement we have properly assessed our geopolitical context and this could have implications much beyond oil. For example, have our leaders taken cognizance of the fact that it is only after big oil left Venezuela that substantial finds were made here? In relation to Guyana, what possible agreement big oil had and perhaps still has with our neighbour to gain access to its huge reserves and what would a rapprochement between the two mean for the future of the industry here? As if we are not already precariously poised, are we being pushed closer to the front line? For, outside of pure naivety, why else would we legitimately earn a US$18m signing bonus from one of our neighbour’s most truculent enemies and then state publicly that it is to finance our struggle against it! Are we being played by big oil to put pressure on Venezuela and what are the possible negative or positive consequences of such a positioning? Some seem to believe that with big oil here the Venezuelans dare not intervene. All I would say is that in a world in which the multinationals operate there are no permanent friends or enemies, only permanent interests: profit maximization. Further, under pressure from the climate lobby, it is doubtful that the world will be able to use all of Venezuela’s oil.

One of the greatest difficulties is that we do not properly understand the uniqueness of our situation: that Guyana has a political environment that requires special attention. The government will need more than money to convince a substantial portion of our people that everything possible is being done to provide them with the good life. There is no meaningful sustained national opinion and thus consensus and we do not have institutions that can facilitate this badly needed quality at the highest national political level. The Petroleum Commission does have stakeholders’, including opposition, representation on its board but it is a policy taker in terms of the vital political decisions. The regime has decided to establish a Department of Energy under the Ministry of the Presidency that could be useful if its scope is reconsidered and efforts are made to institutionalise consensual decision- making at this level.

It is difficult to understand how in the modern world a ‘green’ government could possibly conceive of an energy department that is only concerned with petroleum – an essentially outdated energy source. While the government must seek to provide the greatest value from our oil and gas resources, this must be related to climate change and geopolitics. Yet, given how government is normally organised, this department will have to relate to a cabinet sub-committee that would not normally consist of important stakeholders such as the opposition party, labour, business and civil society, but their inputs on these kinds of issues are essential if there is to be consensual decision-making at the policy level. In his role as conceptualiser of the new department, the challenge for Minister Raphael Trotman is how to devise an organisation that can input a national political energy consensus at the highest possible policy level of the state.


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