Dec 07, 2022 News
– Glenn Lall questions whether job was done locally or overseas
Kaieteur News – American oil giant, ExxonMobil has embarked on an aggressive public relations campaign in an effort to sell Guyanese a message that this country was receiving 52% of the profits from its oil resources in the Stabroek Block. But Guyanese are not buying it, with many taking to social media to express disgust at the message on the billboard.
Observers have said that Exxon’s public relations campaign is sure proof that the company was under enormous pressure to renegotiate the oil deal and has now turned to propaganda to sell its message.
The issue of the billboard was first made public by Businessman and Publisher of the Kaieteur News, Glenn Lall, who denounced ExxonMobil for the move. The company also indicated on the billboard that Guyana has received more than $280B since oil production started here late 2019.
Speaking on this issue, Lall said citizens need to know that the cost to erect the very billboard is being recovered by ExxonMobil based on the lopsided contract it signed with the Guyana Government. He also questioned whether the job to build the billboard was done in Guyana or overseas.
“ExxonMobil is spending millions, further shortening our share to build and erect huge billboards, to tell us the Guyanese people we are getting 52% out of the Stabroek Block,” Lall stated. He asked 52% of what? Not the whole apple, but 52% of a ¼ of the total revenue made. He added that what Exxon should have been telling Guyanese on those huge billboards, is who is getting the ¾ of the apple plus the other half of the quarter apple which remains. “It is mind-boggling, that these guys can put up billboards staring us in our faces to mislead all of us and our leaders, all of them, are silent!”
The company has been hammered locally for the lopsided contract it signed with the then Coalition Government, which offers this country a mere 2% royalty. The deal is also fraught with a number of loopholes including the lack of ring-fencing provisions among other things.
Kaieteur News has been told that the oil company has erected four of the billboards in Berbice; two in Region Three and one on the Soesdyke-Linden Highway. Another billboard was also erected at the Cheddi Jagan Airport.
African Activist and Businessman, Eric Phillips commenting on the billboard wrote on his facebook page on Tuesday that he went to the CJIA Tuesday morning and “…was shocked at how barefaced this was.” Joining the thread another person commented: “Why lie? Goes to show that they know the deals are crappy. Another Guyanese wrote: “Yet less than one million adults can’t benefit from a miserly million dollars that can’t give me a house foundation.”
Additionally, Satruhan Seerattan commenting under the story published by this newspaper wrote: “I think that this Government …really got Exxon doing a lot a nonsense and right now the PPP Government need to get out of power now before it too late or the Guyanese people will be suffering more we do not need PPP or PNC or APNU or AFC they are all the same we need a new Leader”.
Adolphus Humble wrote: “Where does Exxon get the authority to do something like this in a Sovereign State? Any billboard they erect should be advising Guyanese how they can be gainfully employed within that company. Our Government solely, must be the authority to inform its citizenry of the country’s benefits or losses. Since this is not actually the case we must wonder what is Exxon’s true role in this oil industry. It would appear as if Exxon, its partners and international players are the real owners of Guyana’s natural resources, not oil alone. In this modern day of technology we are well aware of and up to date with international conspiracy theories, and how they work. According to the saying ‘you can’t fool all the people all the time ‘. Guyanese let’s face reality, we were sold out to our colonizers all over again. We are worth nothing to these Politicians even though we the people are the real government. Our government will not and cannot do anything to stop Exxon even though the oil contract can be changed. Ya’ll know why? Because there is another secret agreement that none of us can see, which ensures such. Our only solution is for Guyanese of all ethnicities to unite together and enforce our role as Government. We the people are the Government not those who are supposed to manage on our behalf. Wake up Guyanese and live.”
Joann Joseph said: “Unbelievable!! A giant brainwashing billboard,!!,Exxon knows exactly what kind of population they dealing with, long before they started operations here they sent in their people to suss out the population to see what they could get away with. The divisiveness of the politics was an oilman dream come true, all they had to do was stir behind the scenes and bingo! hence, what’s happening now…”
Ram Singh wrote: “52% equal 50% of 25% profit oil plus 2% royalty. Guyana percentage equals 14.25 % of oil extraction.”
Only last week this newspaper cited a recent Bloomberg Report, which highlighted that while Guyana’s oil revenue has a 50-50 split with a 2 percent royalty paid to the Government, industry analysts insist that Guyana would have provided “an unusually sweet deal for Exxon”. “It’s the most favourable (contract) I think I’ve ever seen in the industry, anywhere,” Tom Mitro, a senior fellow at Columbia University’s Center on Sustainable Investment told the agency. As a Financial Officer at Chevron for three decades, Bloomberg said that Mitro crafted deals with Governments in several developing nations and later jumped to the other side of the table, consulting on behalf of developing countries, including Angola, in their dealings with fossil fuel companies.
Exxon has often defended its contract with Guyana, saying that it took on significant risks by gambling on a country with no history of oil production and very little energy infrastructure. “The terms of our petroleum agreement with the government of Guyana are common in the industry and competitive with other countries at a similar stage of resource discovery,” a Spokesperson for Exxon told the firm. “But the terms with Guyana were drawn up after the discovery had been publicized as being unusually large,” and according to Mitro, Exxon was aware of the resources in Guyana. A roughly even split isn’t unheard of for a high-risk operation with a shaky promise of payoff but when the probability of success is greater, the Government generally gets a significantly larger share, often through increased royalties, Mitro reported. A Rystad Consultant, Bloomberg said, also noted that global average for a Government’s take in offshore projects is 75 percent.
It was noted however that beyond the basic percentage splits, more surprising concessions are buried in the Exxon contract. “For example, the contract stipulates that any income taxes imposed on Exxon and its partners be paid for by the Government. However, Guyana passes the companies a receipt for those taxes, which Exxon can use to earn a foreign tax credit in the United States.” And while Exxon has claimed that this is common practice, Mitro clarified that this was once true, “but now describes the practice as “highly unusual and beneficial to the companies.” There are additional benefits to Exxon in the contract, Mitro continued. “The company is allowed to use current oil revenue to repay itself for future expenses for decommissioning and abandoning its wells. The company likely won’t incur those costs for decades. “I’ve never seen that, anywhere.”
Mitro added that even the geographic size of Exxon’s lease—26,806 square kilometers (10,350 square miles) matters. “It’s about nine times larger than Exxon’s average international offshore lease,” Mitro has calculated, “and roughly 100 times larger than the average lease in the Gulf of Mexico. The Guyana contract includes an unusual provision allowing the company to immediately recover costs for additional exploratory work anywhere within that area. Exxon effectively pays itself back for those costs out of the oil that otherwise would go to the Government.” Most production-sharing agreements covering large areas allow such deductions only within small, specified areas, Mitro said, “not everywhere under lease.”
On conclusion of annual spending, Guyana is provided a two-year time limit to audit the costs handed over by Exxon. Apart from local stakeholders expressing concern over the short time limit, they have also expressed reservation about Government’s failure to audit within a timely manner as well as the type of audit conducted. This is especially the case since Vice President Bharrat Jagdeo, the Lead Official on the oil sector was adamant that Guyana does not have co-management status with the oil companies and cannot monitor cost in real-time. He urged therefore that Guyana’s power lies in the audits conducted to ensure that the costs presented are not bloated and Guyana in turn loses more than it should.
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