It took a full one and a half years for the contract signed between ExxonMobil and the Government of Guyana to be made public. The contract was signed on June 27, 2016 but was only made public in late December 2017.
Had it not been for the efforts of Chris Ram and the Leader of the Opposition who confirmed that he was sure that a signing bonus was paid, this contract would have still be buried in the woodwork in the Ministry of Natural Resources.
A lot of ‘strange’ excuses were provided as to why the contract could not have been made public. None of the excuses made were credible. None should be accepted as reasonable. Even Exxon, who was the main culprit in this deal, came out and said it had paid a signing bonus. The President has not fired any of those individuals who sought, by their statements, to deny that there was a signing bonus.
The government is not being let off the hook for signing the worst deal in the history of Guyana. The government has to accept responsibility for what it did. But we must understand that the government was also the victim.
Exxon’s superior negotiating ability, when placed alongside that of Guyana’s inexperience, resulted in a lopsided deal. The government got the shaft. Exxon came out smiling and Guyana came out stunned. We therefore should not dismiss the inequality in the negotiating positions of Exxon and Guyana.
It is easy for people to say that the government has to take responsibility. You do not put a seasoned veteran to negotiate with a baby, and this is what happened.
The argument that is being made within these columns is not that the government should be exculpated from blame. The argument is not that the government mishandled the negotiations. These are not being denied.
The argument is that a powerful company like Exxon dealing with a baby like Guyana should not have been so ruthless in its negotiations. As a good corporate citizen, which it holds itself out to be, it should have tried to help Guyana to get the best resources to negotiate on behalf of the country.
This may sound absurd, but this is how responsible corporate companies behave. When dealing with ‘babies’, they do not try to ‘jook’ their eyes out. They are to help them.
It makes good business sense for Exxon to have tried to point Guyana in the direction of experts. Exxon is here for fifty years. Guyana’s oil can’t finish in your or my lifetime. Exxon has long-term interests in Guyana. It therefore makes sense for Exxon to ensure that a fair deal was negotiated. A major oil company does not wish to attract negative publicity from within the country with which it is doing business.
Exxon and other oil companies know all too well what a bad reputation can lead to. The oil companies which operated in Venezuela more than one hundred years ago were only interested in plundering the resources of that country. They created pockets of wealth, but for the vast majority of Venezuelans, the foreign oil companies were draining them of their wealth.
Carlos Andres Perez came to power and nationalized the oil companies. He created large state-owned oil companies which ensured that the oil wealth remained, for the most part, in his country.
Exxon also had a bad experience in Venezuela, a matter which it is still fighting. Its assets were nationalized by the Venezuelan government. It therefore knows the dangers of not dealing fairly with countries in which it operates.
Exxon therefore has an obligation to renegotiate the contract which it signed with Guyana. Making political capital over the fact that an incompetent government sold out the birthright of Guyanese will not change anything.
Public pressure will be brought to bear on Exxon to renegotiate this obscene deal. The government therefore has to press for a renegotiation of this deal. But the fact of the matter is that Exxon’s contract allows it to decide whether any changes should be made.
No government likes to admit that it blundered. The APNU+AFC coalition will not admit this, not in its present mode. But neither do multinationals want to operate in an environment in which the public feels that the company shortchanged the country.
Therefore it is in Exxon’s interest to correct the deficiencies in its contract with the Government of Guyana. It makes the world of dollars and cents.
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