Dear Editor,
I refer to your news article titled: “Opposition offers support to gov’t in facing down ExxonMobil” (SN Feb. 27th) and wish to comment as follow:
What credibility does this former Minister David Patterson have? He stated that the 2016 Oil Contract was vastly improved over the 1999 Contract. This is ridiculous. The 2016 Contract was a complete re-negotiation. No limits were placed on what you could have negotiated for. And, what exactly improved? Let’s consider the following items:
(1) Guyanese workers must be involved in all areas of oil operation (downstream, upstream, midstream). Gov’t in collaboration with ExxonMobil must provide for training. (In Singapore, the Gov’t together with foreign companies collaborate to design workers’ training programmes). Oil is a national resource – priority must be worked out for Guyanese workers to benefit, if not it becomes a case of raw exploitation.
(2) Why is IHS Markit allowed to audit $460 million expenses without partnering with local accounting firms? Is this a mistake or is it deliberate? How would local accounting firms develop experience in oil business auditing? IHS Markit contract is $300,000. You mean to say they couldn’t engage a local accounting firm to partner with IHS Markit?
(3) Average Royalty paid to Oil Countries around the world is 12%. Suriname gets 6.25% Royalty. Why is Guyana getting only 2%? Guyanese accountant and oil activist has popularized a slogan: “2% royalty is daylight robbery”. Did Trotman sign this 2016 contract under duress or was he duped? (Trotman told the Guyanese press he had been instructed to sign). Has there been an investigation by the CID to find out the circumstances under which Trotman signed this contract? Has the current govt. ordered an investigation?
(4) Today’s world market price per barrel WTI Crude is US$63.18 (round to US$65), Brent Crude US$66.68 (round to US$65). Stabroek Block has a proven 9 billion barrels of oil. Assuming Trotman had negotiated for an 8% royalty (still much lower than the average paid to the rest of the world). How much is Guyana losing? At current market prices – 9 billion barrels x US$65 x 0.08 (%) = US$46.8 billion; as per Exxon-Mobil and Guyana contractual agreement – 9 billion barrels x US$65 x .02 (%) = US$11.7 billion. The difference here is US$35.1 billion. This is what Guyana is losing by failing to negotiate for a fair royalty, one compatible with other oil producing countries.
For a small and underdeveloped country like Guyana to lose US$35 billion dollars due to the sellout job of a govt. or a minister – it must be a very depressing thought for its 750,000 inhabitants.
Sincerely,
Mike Persaud
