Government’s telling oil companies to “Pump baby, pump” is throwing gasoline on fire – Dr. Hunte

Mar 16, 2023 News

…says with meagre profits, Guyana could be left to bear disaster expenses

Kaieteur News – As the Government of Guyana (GoG) proudly cheering on Esso Exploration and Production Guyana Limited (EEPGL), the operator of the Stabroek Block and subsidiary of ExxonMobil to increase daily production targets at the Liza One and Liza Two fields, the administration has essentially allowed the company to throw gasoline into a fire.

This is according to Professor and former Ambassador, Dr. Kenrick Hunte, who holds a PhD in Economics from the Ohio State University, USA. In a letter to this publication, Dr. Hunte while responding to a missive by former Prime Minister, Samuel Hinds pointed out that the two operational projects are now producing oil above the respective design capacity. The spike in production activities however also increases environmental risks for the country, one which the nation may very well have to bear on its own, considering the lack of a parent company guarantee.

Professor C. Kenrick Hunte

Dr. Hunted explained, “the destruction-risk to the environment has increased, since the extraction operation is now above its designed capacity, and any failure without sufficient insurance, which the EEPGL does not cover, will be a significant charge under the meager returns that Guyana receives of only 14.5 barrels to every 85.5 barrels that EEPGL receives from every 100 barrels of oil extracted.”

He clarified, “In other words, for every dollar that Guyana receives, EEPGL captures $5.89. This is part of the inequity that Guyana faces.” As such, the Professor informed readers that the encouragement to the oil companies, by government, to “pump baby, pump” is no less than “a call to throw gasoline on a fire that we will not be able to extinguish without a heavy cost on ourselves and our neighbours, who will be damaged by our negligence.”

The current operational environment, according to him, allows EEPGL to flee without paying the penalties that can be mounted in the event of a major disaster. To this end, he sought to highlight the importance of Guyana protecting itself.

“In contrast, EEPGL’s highest responsibility is to its shareholders and not to Guyana; for they are doing a great job in extracting our wealth and patrimony without push back,” Dr. Hunte posited. He also challenged the former Head of State to prove how Guyana could benefit from a 30 percent take from the Stabroek Block Production Sharing Agreement (PSA) as Hinds in a missive stated, “when all capital has been recovered, depending on the price of oil and running costs, Guyana could be receiving more than 30 percent of the price of oil when the price is high…”

Dr. Hunte was keen to note that without a ring-fencing provision, coupled with the fact that Guyana, has to pay from its oil receipts EEPGL taxes and cover the insurance costs this burden on Guyana will likely never end.

• Disaster, Dr. Hunte, expense, oil, pump