GUYANA RACES AGAINST THE CLOCK TO BANK ITS OIL BONANZA

Jul 20, 2022 Letters

Dear Editor,

“Guyana races against the clock to bank its oil bonanza”, is the title of an article by Reuters, published on Yahoo online news (July 18^th). The author, Sabrina Valle had a face-to-face interview with Mr Jagdeo in which he said the following (to paraphrase):

Mr Jagdeo argued that calls to halt the developments for the country to realise a larger share of its oil revenues, would not benefit the country, as it could introduce added inflationary pressures to Guyana’s domestic economy. Elsewhere in the Reuters article Mr. Jagdeo called for ramping up oil production.

Larger share of revenues would not benefit the country; would introduce inflationary pressures. But larger aggregate revenues from Ramping up production is ok, argued Mr. Jagdeo.

It is hard to believe the de facto head of State made those statements. But I am sure Reuters recorded/quoted him correctly. Getting a larger share (currently it is nominally 14.5%) is bad; in the same breadth he called for ramping up production.

These statements from Mr. Jagdeo do not make any sense. Would Mr. Jagdeo sell his house for say, one-tenth of the value (bigger share, fair value is bad)? Let Exxon get a bigger share. Ramping up production means letting Exxon drill the resource quickly [before decarbonisation begins] – and let Exxon get the bigger share.

What’s the matter with Mr. Jagdeo? He and his party condemned the contract in the run-up to the 2020 election – and promised to renegotiate. In November 2020 I watched Mr. Jagdeo on Globespan, explaining how the absence of Ring Fencing would cause Guyana to lose $billions on this egregiously lopsided contract. Now he is inventing false arguments to justify the contract. Has he undergone some strange kind of transformation?

Something else is very troubling about these statements from Mr. Jagdeo. Bigger shares of revenue will cause inflation, he argued; but not bigger aggregates of revenue that will result from ramping up production. Mr. Jagdeo is an economist. He knows no economy can absorb money in excess of its optimal capacity lest it causes inflation. But isn’t that what SWF is for – the place to park your excess rentier incomes. Kuwait, Norway, UAE – these countries have huge SWF and they do not cause inflation.

Mr. Jagdeo is laying the intellectual groundwork for Exxon to exploit Guyana’s oil resource as quickly as possible without paying Fair Value for its oil resource. President Ali has a responsibility as head of State to rein in Mr. Jagdeo. Order him to practice silence because every time he opens his mouth he sounds like a VP of Exxon.

There were some 75 blog comments on that Yahoo News article. Several bloggers were doing PR propaganda for Exxon.

Here is an example of a non-partisan blogger, most likely someone not connected to Guyana – and my response to him:

Calili

1 day ago

Saw the expose on Vice News about Guyana. They will fail. Their vice president is in league with crooked Chinese companies, taking kickbacks from them for projects.

Mike

14 hours ago

Calili, It’s much worse. This VP has no concept of the role of a leader of a sovereign nation. Every time he opens his mouth, he is defending the lopsided oil contract. Folks will think he is the VP of Exxon. His pro-govt bloggers on Stabroek News online platform now make a novel argument: if the VP were to demand Renegotiation, US govt would collude with Exxon to oust him from power. This is a load of crock. Cold War is over. US govt has long exited that business. Why is the VP defending a contract in which the Guyanese nation is losing $billions – more than $47 billion in royalty alone on 11 BB of crude? Is that so much of mystery for folks to figure out?

Mike Persaud

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