ExxonMobil’s cheery announcement yesterday that it had made a final investment decision for the Whiptail development in the lucrative Stabroek Block has to be declared to be what it really is; another rip-off of the Guyanese people facilitated by the PPP/C government.
At a 2% royalty, fixed 50-50 profit share no matter the amount of oil equivalent drawn, no income taxes, no ring-fencing of expenses to particular projects, the dubious assignment of 75% of oil to cost recovery and the ever-growing environmental risks to Guyana and its neighbours, more people are becoming aware that any new extraction will have ExxonMobil laughing all the way to its coffers while the 40% poverty rate here remains virtually unchanged.
Of course there will be profit to the country from Whiptail but nothing near what would have been a reasonable deal had the APNU+AFC government not committed the original atrocity in 2016 by signing a new Production Sharing Agree-ment (PSA) without expert advice and consultation with parliament. It is an abomination that then President Granger and those around him have to be held culpable for and there must be a Commission of Inquiry into this matter.
Compounding this injustice to the Guyanese people, the PPP/C government has become ExxonMobil’s enabler-in-chief. There were early signs. Within two months of entering office on August 2nd 2020, the government signed the licence agreement for Exxon’s third project, Payara when it would have been well-advised to evaluate the 2016 PSA and to consult widely on how the overall deal could be improved and guard rails installed. This was not to be the case and the government has since aided ExxonMobil pell-mell with the Yellowtail, Uaru and now Whiptail projects with more in the works.
Aside from the loss of returns to the country, it is also the height of recklessness as it relates to the volume of extraction of oil equivalent from the Atlantic and the burgeoning environmental risk. When Whiptail is at capacity in 2027, a gargantuan total of 1.3 million barrels of oil per day will be lifted. The government has vulgarly tried to defend the wholesale ripping out of oil by arguing that the country is a huge carbon sink and will remain so because of its large forest cover. Those ancient forests are the patrimony of the people of this country – their ancestors and descendants – and not to be balanced against climate-endangering behaviour. Wherever in the world ExxonMobil’s oil is finally combusted, it is Guyana’s oil and the country bears moral responsibility for the continued heating of the planet, not losing sight of the fact that the country itself is seriously in danger from rising sea levels, droughts and other climate-influenced phenomena.
There is also the not insignificant question of why President Ali’s government is not devising a depletion policy? Why is this being left to amorphous formulation by various government officials or hewing towards what ExxonMobil wants i.e. extracting as much oil as fast as possible without any concerns over the extent of scope 1, 2 and 3 emissions?
It is also a matter of conjecture why both ExxonMobil and the Government of Guyana are keeping the public in the dark as it relates to the increased oil and gas reserves from recent discoveries. Withholding this information does not accord with transparency and accountability.
Guyana must adumbrate a depletion policy that aligns its reserves with inter-generational equity, its requirements to modernise Guyana and to transform the economy away from oil and gas. It must sculpt this vision and cost it and that is the amount of oil that should be extracted.
It cannot be easily apprehended how the government could be entertaining a possible sixth extractive platform when it does not have a regulatory petroleum commission in place, something it had promised in August 2020. It cannot be easily understood how this new development can occur when, no matter what President Ali has said, there is no guarantee that ExxonMobil will indemnify Guyana for any type of spill that could contaminate Atlantic waters and the Caribbean Sea.
Protestations by the government that rejigging the 2016 PSA will ruin the investment climate here is nonsense. There is a greater chance of an iceberg in the Amazon River than ExxonMobil withdrawing its armada from the Stabroek Block. Indeed, the 2016 PSA recognises the possibility that the two sides can renegotiate. So what is stopping President Ali and his government? What hold did ExxonMobil have over the APNU+AFC government? What hold does it now have on the PPP/C administration? That is the code that has to be broken.
