Oil will do nothing for Guyana. This is a bold, thought-provoking, fear-inducing and disconcerting statement. But is there any truth to it? Most Guyanese are not economists or financial analysts. Most are not politicians or lawyers. Most will probably never see or read the Petroleum Agreement though anyone can access it. In short, most will depend on the media and the voices of their leaders for accurate information about oil, while some are waiting for wealth to magically appear and others expect nothing.
We have been told about the certainty of oil wealth despite those who have been whispering and shouting warnings; those who say that oil exploration and production is terrible for the country, not only because of the terms of the Petroleum Agreement, but because of environmental risks and the damage that will occur.
But do we simply dismiss the voices of the critics or treat them like conspiracy theorists? Or do we, the people, listen to all the voices, familiarise ourselves with the agreement and formulate our own conclusions?
In most of the oil and gas forums I have attended, Guyana’s 50% profit, the 2% royalty and the Sovereign Wealth Fund have been highlighted. It seems simple enough for even the average man to understand exactly what Guyana will be receiving initially. I was also fortunate to hear a lecture from an employee of ExxonMobil who highlighted much of what has been made public. In short, it was noted that in the first years of production ExxonMobil would be recovering their costs which would see it taking at least 75% of the revenue.
Article 11 (Cost Recovery and Production Sharing) of the Petroleum Agreement between the Guyana Government and Esso, Hess and Nexen, 11. 2 states, “All Recoverable Costs incurred by the contractor shall, subject to the terms and conditions of the agreement relating to Non-Associated Gas made pursuant to Article 12, be recovered from the value determined in accordance with Article 13, of a volume of crude oil (hereinafter referred to as “Cost Oil” ( and/or Natural Gas (Cost Gas) produced and sold from the Contract Area and limited to any month to an amount which equals 75% of the total production from the Contract Area for such month excluding any crude oil and/or natural gas used in Petroleum Operations or which is lost.”
ExxonMobil’s expert assured us that with time Guyana would gain more revenue as cost recovery decreases. Dreams are sold every day. Time will tell.
But the misinformation and misperceptions about what oil will mean for our country abounds.
Many Guyanese, despite the whispers and shouts about risks involved in oil exploration and production, still hold on to the glimmer of hope that we will be better off economically. After all, it has been said that even the 2% royalty will be a vast amount based on the quantity of oil we are said to have and will be producing. While we hope for the best, facts and warnings cannot be ignored however.
In May of this year, there was an oil and gas forum at Moray House. I am not quite sure how long the video has been circulating of Melinda Janki’s presentation, but a few days ago, it came to my inbox – someone urged me to write about it. I was not too keen since I have penned several pieces about oil already. But the presentation in which Janki declared that oil will make Guyana poorer and not richer was startling and deeply troubling.
I watched the video a few times and took notes. All the negative outcomes that could result from Guyana’s oil industry were noted. It was the first presentation I have heard since attending lectures on the sector that focused solely on “doom and gloom.” The presentation left me with the impression that our leaders are clueless. Like many others, I questioned whether the agreement was thoroughly scrutinised before it was signed. Are we the people being sold a dream that may become a nightmare?
In conversations thereafter, many were also deeply troubled about what was said. Some questioned whether Guyana should even move ahead as planned. Never mind the agreement and Guyana’s billions in debt. The examples of places like Chad and Papua New Guinea were noted – oil rich countries that are worse off than they were before oil, partly because they did not have the capacity to sell their own oil and partly because of corrupt leaders. Some also said that they are hoping we do not end up like Venezuela, where citizens are starving to death and fleeing the country. Some of the points that stood out to me from Janki’s presentation were:
*Guyana cannot verify how much oil we have.
*Esso, Hess and Nexen get as much free oil as they want since we have no way of verifying and must go by their word.
*Guyana gets paid in oil.
*Guyana must depend on the oil companies to sell our portion of the oil and pay them to do so since we have no tankers or oil refiners.
*We must pay for all the pre-contract costs, which already amounts to billions of dollars.
*75% of the profits will go to cost recovery as noted above and Guyana will get 50% of what is left – if any month’s costs exceeds revenues, costs will be carried over to next month. This is noted in the Petroleum Agreement at Articles 11.3 and 11.4.
*The environmental damage and risks, such as oil spills, well blow-outs and tanker collisions.
There were many other significant points. And while no solutions were offered, the fact is many have been saying for a long time that Petroleum Agreement is unjust. Ms. Janki is just another voice.
While some have dismissed what was said as being based on misinformation, manipulation and baseless conclusions, one thing is clear: many facts were noted and could be found in the agreement. Many are more confused now more than ever.
What we are certain of in the oil and gas debate is that facts and untruths are all intertwined.
Some of the people I interacted with after viewing the video have also concluded that naysayers are only trying to create fear. Some said our oil is a blessing. Whatever is one’s point of view, the onus is on every Guyanese to read the agreement and independently gather information. An informed people are a strong people. An informed people are a powerful people and who knows what changes our collective voices can bring to see that we are treated fairly. Is it too late to demand that we seek better terms and conditions? Is it too late to simply let the oil remain in the ground?