Oct 09, 2021 Editorial
Kaieteur News – We will make this simple, so that every Guyanese fully understands what is involved, and how we are gutted by the Exxon oil contract. As reference, we use the article titled, “Unbelievable tax giveaways to oil companies reduces Guyana’s take from 12.5% to 9% -International Financial Expert Tom Sanzillio” (KN October 3). Guyanese owe a word of thanks to Mr. Sanzillo for his timely, eye-opening, and definitely incredible analysis in breaking down the numbers to where they are easily absorbed.
We at this publication, however, desire to take things to a still simpler level, so that all citizens have the fullest appreciation for the contract we have, and the partners we live with in Guyana, which operate under the name of oil companies, and of which ExxonMobil towers above head and shoulder.
Using Mr. Sanzillo’sUS$60 per barrel of local oil produced, Guyana ends up with a meager US$5.63 net profit per barrel. It should be noted that this minimal US$5.63 is not making room for what Mr. Sanzillio still considered to be other areas of “revenue leakages” in the oil agreement. What that net take of US$5.63 for Guyana means at US$60 per barrel, is that we are getting robbed for every barrel of oil leaving these shores. However computed, be such on a dollar basis (less than US$6), or a percentage regime (less than 10%) per barrel the rest is gone to rapacious oil partners. We will return to that shortly.
With over 9 billion barrel of known oil equivalents, this country could have approximately slightly under US$54B coming to it, if all of the known reserves were pumped, and using the market price of US$60 a barrel. That may look like, and convert to, a lot of money to Guyanese who are accustomed to thinking in Guyana dollars, and its exchange ratio of GY$200: US$1, give or take. But, when we look at our budgets, our big-ticket projects, and our borrowings, that revenue intake fades before our needs, which could possibly leave us not even at breakeven point. So, after all this struggling and waiting, all these arguments and hoping, the outlook is discouraging, given what we are looking at and where we could be heading when the outrageous nature of this sickening contract is considered in its renounceable features.
Now we take this to other places, since it is the nature of the oil beast we are dealing with, and which we must confront. History has taught the world that oil is one of the more volatile commodities around, which means that the figure used by Mr. Sanzillo for his calculations could go either way due to war, geopolitical tensions, political upheaval, natural disasters, and the likes. We block our minds from thinking of our country’s take at below US$50 per barrel. But we recognise that in an environment of rising oil prices and with US$100 per barrel looking quite reachable in the near future, we could be somewhere in the vicinity of between US$80B to US$90B as our total revenue stream, all current estimates applying inclusive of oil companies’ expenses. While the oil companies could make additional discoveries, those are up in the air and unknown at this time. So, we work with what we have, which is the right point for us to revisit this contract and which can only be described as diabolical.
The coalition cannot be blamed enough for what we already know, and we shudder to think of other possible areas of “revenue leakages” that are still to surface. We can and do tar and feather the coalition for its unpardonable failures in approving this lopsided contract. Of this, let there be no mistake and it should be run out of town. In the next breath, however, we look at the present PPP Government, and wonder why its leaders are not working harder, being more open and bringing every sort of pressure on Exxon, so that it yields more to us. When citizens know more from leaders, we can join with them and fight with them, to get more of what is rightly due to us. It is not this insulting nine percent. It is not this contract that cheats us at every opportunity.
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