Royalties, risks, returns

Sep 21, 2022 Editorial

Kaieteur News – Guyana’s Vice President, Bharrat Jagdeo is back singing his old tune and seeking to get Guyanese to join his one-man chorus about royalties. This was what he did during the three-hour long conversation with the publisher of this newspaper. Once again, Mr. Jagdeo was more about what the oil company should get, and almost a whimper, on what Guyana must demand and make ExxonMobil and its partners deliver. All this pussyfooting over royalties must stop, and it is either ExxonMobil and partners want this oil on our terms, or they are ready to face whatever comes from agitated citizens, as advanced by honest leaders.

Regarding royalties, Mr. Jagdeo must be first and foremost about the business of Guyana, and less about what is right for ExxonMobil. Jagdeo must stop hedging. ExxonMobil is quite capable of looking after its own interests, which it has done so most handsomely at our expense. The ExxonMobil consortium already worked out the risks, and made decisions about Guyana’s oil, with dreams of the highest returns. ExxonMobil doesn’t need Mr. Jagdeo’s help in measuring its risks and calculating fabulous returns, that is their business, and they are extremely good at it.

It is perplexing, therefore, that Mr. Jagdeo keeps harping about “legitimate expectation” and “decent return” since ExxonMobil has already taken care of those beyond the company’s wildest imagination. Like an aggressive trade union leader, or a highly skilled divorce settlement lawyer, Bharrat Jagdeo’s business and emphasis must always be on what is good for Guyana, and the people who put him back into office. This is where he has to be bare-knuckled and iron-fisted in laying everything on the line for Guyanese, and not make such a priority of “legitimate expectation” and “decent return” of foreigners. Guyanese have been treated in an illegitimate manner and with the greatest indecency, and this must stop. Mr. Jagdeo is up to the task, or he is not.

He cannot operate in a vacuum of ignorance about the legitimate aspirations of Guyanese. Because our oil is of such a fine quality, and so cheap to produce, ExxonMobil could afford to give Guyana multiples of what is its current royalty share and still make more than the “decent return” of which Mr. Jagdeo advocates for so powerfully. His powerful energies should be devoted to what is good for Guyana, and not to singling out for vilification the few Guyanese who are patriotic enough to say that more is better, and better is what must be deposited in the bank. We must a get a fair share, and that should be without delay, while Exxon still makes money hand over fist.

ExxonMobil and Hess need Guyana’s oil more than we need them. This is a trump card for Guyana, and used wisely, it could put us in a stronger financial position. Mr. Jagdeo is smart enough to know that when his PPP/C Government goes it alone, then the bargains struck with ExxonMobil will always have a suspicious smell about them. Part of this has to do with trust, and his mysterious dance steps when hard oil issues are tabled. It is better to partner with the political opposition for a united front, as much as that is despised, if only to get more for our oil.

We say it again: the oil companies must get a fair return for their investment. But it is not at the levels that we live with currently, and to our detriment, with too many Guyanese severely handicapped and distressed (UN 2022 Report). The oil companies combined take (profits) from Guyana’s oil must not be the head, the heart, the wholeness of all the prime parts, while Guyanese are left with the hooves. That can never be fair, and never be accepted as our due, as the best that we deserve, given past leadership failures.

Mr. Jagdeo, the President, and a few Ministers enjoyed great political mileage in lashing the 2016 oil contract. Now they must deliver, by showing how good they are and can be, considering this oil contract that they all damned to hell. If not, Guyanese will think that their leaders have done most poorly, quite treacherously, in representing them and their interests.

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