Dear Editor,
Dr. Tulsi Dyal Singh writes: I spoke about the flaws in the PSA at length at my Moray House talk three years ago. In fact, I tried to console the audience with a riff based on that old primary school poem, “If”. (SN July 5th). I don’t know what Dr. Tulsi Dyal Singh said about the flaws of the contract at Moray House 3-years ago, but I get the drift of his letter: Never mind the flaws [that cause Guyana to be losing $billions]; time to move on, Guyana will still get a lot of money . . . and so on.
The concept of Fair Value for our oil resource is lost on Dr. Tulsi. His camp always reminds me of those Indians who traded gold for trinkets in the 15th century. How many $billions are we losing? A simple math example. Compared to Suriname’s contract, on royalty alone, on 11 billion barrels, Guyana loses $32 billion (11 bb crude times 4.25% times Av price $70). At Av price of $90 a barrel, the loss is $42 billion. (Suriname’s royalty rate is 6.25%, Guyana’s 2%). That’s too much money to lose.
Guyanese people and GoG should demand re-negotiation to fix the flaws of this contract. There are many other graver flaws:
(1) Drilling oil can be done w/o excessive flaring. (GoG has issued a license to flare. Pay $X a ton of carbon and flare all you want).
(2) Pipe infrastructure is designed for production of 120,000 barrels a day. Doing 140,000+ will place a lot of stress on the infrastructure – and risk accidents like a blowout.
(3) Insurance coverage in the event of an Oil Spill is currently $2 billion. Who covers liability in excess of $2 billion? No one. Exxon/EEPGL refuses to put in writing their commitment to cover (self-insure) liability above $2 billion. Former EPA head Dr. Vincent Adams says drilling currently is done w/o proper insurance coverage.
(4) Dr. Tulsi Singh (and others in his camp, Joel Bhagwandin et al) thinks capital costs will be paid off, then GoG will get a bigger share of profits. Dr. Kenrick Hunte (see his letter in SN yesterday) says that’s a ‘pipe dream’, given new capital is added on all the time – those to develop new oil fields and wells. No Ring Fencing. Show us a sort of amortization schedule – how and when capital costs will be paid down.
(5) Profits tax has been waived on Oil Companies for the life of the contract. (Well, they say GoG is paying the tax for Exxon. How does that work?). Can anyone make sense of this? Can anyone swallow this one? Tulsi Singh? Joel Bhagwandin?
My poster board makes the point that this contract imposed (not negotiated, not vetted, but signed by a Minister) on Guyana is unfair to the Guyanese people. It is a scandal. No one, including Dr. Singh, should pretend it is otherwise. Heard the latest pushback argument from Mr. Jagdeo and his PR people? Imperialists (they mean USA) and Exxon will collude to oust Mr. Jagdeo from power, if he were to demand re-negotiation. That’s a load of baloney. U.S. foreign policy does not work like that today. If someone as big as Exxon is scamming billions of dollars from you, you (Guyanese people) have a God-given right to agitate for a Fair Deal contract. Do not be intimidated by Exxon.
Sincerely,
Mike Persaud
