Latest update April 25th, 2024 12:59 AM
Feb 10, 2020 News
Since the release of the report, “Signed Away” by non-governmental organization Global Witness, the Coalition administration has deemed the document to be without merit.
The administration has also said that the report stands on “fanciful” estimates; with the most bizarre one being that Guyana left US$55B on the table following poor negotiations with ExxonMobil and its partners for the Stabroek Block licence.
But the firm which Global Witness commissioned for the economic analysis, OpenOil, has responded via a five page missive to the media.
In that document which will be reproduced in several parts by Kaieteur News, OpenOil categorically states that its US$55B estimate is not only accurate, but the model used to arrive at this figure can withstand public scrutiny. On this note, OpenOil, which is based in Berlin, said that its fiscal model follows the FAST modelling standard (https://www.fast-standard.org/about-fso/), on whose advisory board the OpenOil Director, Johnny West, sits.
The FAST Standard, which was founded over 18 years ago, and is used by thousands of Excel modelers worldwide, allows for public scrutiny and for a number of factors to be considered or amended.
Speaking to the model used, OpenOil said, “…Our model projected the revenues Exxon’s Stabroek licence would produce until 2056, and some have stated that projections like this are speculative, or arbitrary. Of course, our model’s estimates are speculative in the sense of not being empirical fact – all forward-looking estimates are. But they are not somehow more speculative than anyone else’s.”
Further to this, Open Oil said that the model it used not only considers the money lost over a 40 year period (US$55B) but also considers for example, the difference in revenues to government by the end of 2025 which would be US$2.8 billion, and US$16.3 billion in the entire decade of the 2020s.
OpenOil also stated that it had sent its projections to ExxonMobil twice before publication: once in December and once in January. The company said that it invited critique, amendments, updated data or specific criticisms of the model but received none of substance.
The consultancy firm, which has worked for governments around the world, also noted that ExxonMobil and its partners, like all oil and mining majors, certainly have estimates and projections based on the entire life of the Stabroek project.
The company said, “They would not have invested billions of dollars without them, and they often refer in public statements to conclusions derived from their models. It is also uncontested international best practice that governments should have such models.”
OpenOil also stated that the same level of scrutiny it invites for the fiscal model it produced, cannot be applied to the estimates the government has been quoting from Rystad Energy to support its claim that Guyana got a fair deal.
While OpenOil estimates government’s take from the Stabroek Block deal is 52% under the current fiscal regime, and at a base oil price of $65 in today’s money, Rystad believes that Guyana will get a 60% take. In the face of the Rystad figures, OpenOil says, “Show your work…”
The consultancy firm added, “The only real way to ensure that different estimates are apples to apples comparisons is to publish the entire models which generated them, just as one would for science, and in a form which can be interrogated, such as an Excel spreadsheet. In the absence of that, comparisons of different values from different sources are too methodologically weak to be significant.”
OpenOil sought to emphasize that it holds the belief that it is Guyanese who own the oil, and are therefore important investors in the resource just as ExxonMobil is.
“And, like any investor, the Guyanese people have the right to financial analysis on which to base decisions. This is our only institutional goal,” OpenOil said.
At the same time, the company said it recognises that decision making is a sovereign Guyanese process, as such; it confines its work to financial analysis.
Jagdeo giving Exxon 102 cent to collect 2 cent.
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