Dear Editor,
The admission by Minister Raphael Trotman in a Kaieteur Radio interview that Guyana should have got a “way better deal” than the one he negotiated with Exxon for the lucrative Stabroek Block is cold comfort as we come to realise that the Granger Administration has caused Guyana to lose tens of billions of United States Dollars through incompetence. Yet, instead of accepting responsibility and offering his resignation, Trotman seeks to blame the Guyana Geology and Mines Commission for the contract when it is he and no one else who can enter into Petroleum Agreements.
Of course, there is nothing new or unusual about Trotman’s obfuscation and distortion. It was on display with the Signing Bonus and on his insistence, wrongly, that the law did not permit the disclosure of the Agreement. And if Mr. Trotman could not be trusted on the signing bonus and the simple legal understanding of a small section of the Act, his claim during the interview that Guyana stands to gain some US$120 billion from the 6,600 million barrels of oil estimated to have been discovered in the Stabroek Block is seriously suspect.
Apparently Mr. Trotman assumes that the 6.6 billion barrels reported as discovered will automatically translate into production. This will not happen for two reasons: one, it is not economic at a certain point to attempt to take every barrel of oil at the bottom of the ocean, and second, the contract expressly provides for the operators to utilise from production petroleum used in transportation in the terminal system.
If we take as a fair estimate that the maximum revenue yield will be 6 billion barrels, for Guyana to earn US$120 billion from the Stabroek Block, the oil price would have to average US$80 per barrel for the entire duration of the Agreement and Guyana’s share would have to climb to 25%. When we consider that for a couple of years Guyana’s take will be only 14.25%, 25% does seem way off.
With the current oil price hovering around US$60 per barrel, out of which Guyana will have to incur shipping and marketing costs, I think it is wholly unrealistic to expect Guyana to receive anything close to Trotman’s projections. In fact, Guyana will be lucky to get anywhere between US$72 billion and US$90 billion, or respectively a share equal to 20% and 25% of gross revenue at an average price of US$60 per barrel net. More optimistically, if the price was to average US$70 per barrel over the entire period of the Agreement, the revenue to Government at the same percentage share will rise to US$84 billion and US$105 billion.
Maybe Mr. Trotman should tell the press just how he arrived at his US$120 billion.
Yours faithfully,
Christopher Ram
