Every Man, Woman and Child Must Become Oil-Minded (Part 52)

Getting the work done

Introduction

I will resume the piece on Getting the work done next week to allow me in today’s column to address the outpouring of anger and hurt expressed by politicians, columnists, letter writers and contributors in the print and social media over an article in the New York Times one week ago. The title of the article was “The $20 billion Question for Guyana”.

The writer Clifford Krauss was considered by many as condescending and superficial and even those who saw his style as parody thought it was inappropriate relative to the seriousness of the topic. One Minister went so far as to call for the rejection of the article while one blogger suggested that Krauss should not be allowed back in Guyana. So much for freedom of expression and forward thinking in Guyana.

No one has so far been able to dispute the principal thrust of the article and I found it amusing that while some have questioned the figure of US$20 billion in oil revenues, an article by the Government’s Department of Public Information (DPI) cites the same figure in almost identical context.

 We complain about parody and engage in plagiarism! I have never seen such mind-numbing laziness in my seven or so years teaching at the University of Guyana. Maybe, the writer probably falls within that special group of Guyanese which Minister Jordan described as “proud and resourceful.”

Exxon’s ecstasy 

Not to be outdone, ExxonMobil also joined in the debate expressing happiness “to have the opportunity to operate and live in the communities in Guyana”. Of course ExxonMobil is happy. It was probably happy since 1999 when Janet Jagan cast aside the law and gave them hundreds of oil blocks more than the law intended. But it was ecstasy when AFTER FINDING OIL, the Granger Administration sweetened the deal, probably the first time in Esso’s hundred years plus history that it did not even have to negotiate for immunity from taxation and any laws which will have an adverse impact on their bottom line lasting possibly into the next century!

I on the other hand, find the Petroleum Agreement infinitely more offensive than an article that lasts as long as the news cycle.

Fortunately for those who understand or ought to understand the Petroleum Agreement, they have finally found an opportunity to comment on the country’s oil bonanza without having to confront the lopsided nature of the Agreement. The question for our Government and some of the more informed defenders is whether it is in Guyana’s interest, or ExxonMobil’s, Hess’ and CNOOC/Nexen’s to ramp up production at such rapid rate or whether it would not be more beneficial to Guyana to have a phased approach.

With respect to the US$20 billion, Krauss’ estimate is the gross revenues from the wells when they all come on stream. While oil prices are characterised by extreme volatility, an estimate of $20 billion gross revenue is not outside of the ballpark. Easy lesson

Taking the wrong fork in the road

We do not need any so-called First World example to show how a country can and has benefitted from its natural resources. Botswana, an African country was described with relish by Western writers as having only seven miles of paved road and less than one hundred graduates at Independence, (coincidentally in 1966), and not too long ago as the AIDS capital of the world. Yet, though inspired political leadership and sensible policies, it stood up to the diamond giant monopoly, De Beers, and refused to grant the company’s wish to extract diamonds faster than the Government felt reasonable and in the country’s interest.

The difference between Guyana and Botswana is that Botswana retained control of its resources by way of a joint venture arrangement which, combined with sensible management, meant that Botswana was the fastest growing economy in the world for thirty years! Success led to further success and so positive has Botswana been in advancing its national interest that it insisted, against all the odds, that De Beers must relocate its sales arm and the polishing of the raw cut diamonds to Gaborone, the country’s capital. In the process, it is among the leading centres for diamond production and sale in the world.

In a direct opposite to Botswana, Guyana gave away the store and all its inventory – give or take a little Kraussian hyperbole. It followed instead other examples from Africa: Zambia (copper), Sao Tome and Principe (petroleum) which receive only a small share of the proceeds of their products because their leaders entered into recklessly generous Agreements their leaders signed. 

Even worse, the Granger Administration chose not to take a slice of the petroleum pie permitted by law, thereby relinquishing any say in the development of a resource which the law emphatically asserts belongs to the State. And since the Administration has chosen not to make the Prospecting or the Production Licence public, Guyanese are unable to determine whether the State has any say in the rate of production!

This is what we ought to find offensive and insulting – not some ephemeral news article published in the greatest country in the world, sarcasm intended.  

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