H@rd Truths By GHK Lall – Guyana, an Exxon AGM agenda item

May 19, 2023 Features / Columnists, News, The GHK Lall Column

Kaieteur News – Guyana is making more and waves all over.  This little country down South of the border is in the big time, real prime time; and in this instance-two of them, really-it all has to do with Exxon. This was what registered during the dawn hours of Thursday morning as I absorbed the two news headlines involving insurance coverage (SN), and stock plunge (KN).  The former has made it all the way as an agenda item for the upcoming Exxon AGM on May 31^st, and the latter was all matter of 12%.  Like I said, both were triggered by shifting tectonic plates in Guyana.

GHK Lall

There are only so many items that can be squeezed into the agenda of an AGM, and for a company like Exxon, the competition for that pride of place has to be ferocious.  So, when insurance coverage for Guyana, the real kind involving real money, makes it into the AGM’s agenda, then Exxon has finally sat up straight (was forced to straighten up) and appreciate what it has on its unsullied corporate hands.  Thanks to Judge Sandil Kissoon’s ruling, insurance coverage for Guyana is not shuffled away under the catchall inferiority of ‘Any other Business’ but an agenda item staring in the face.

Finally, this insurance issue in all of its implications gets its day in the spotlight.  No matter the hemming and hawing and the usual bull about ‘waiting for an acknowledgement’ (Vice President Jagdeo), this is now front and center at Exxon’s AGM.  The kind of insurance coverage that Guyanese are clamoring for, and which they must have, is not small change of a billion or even that much bandied about ‘up to US$2 billion’ (the Vice President again), this is going to be a hard, choking conversation for the management of Exxon and its heavyweight shareholders, the bona fide mover and shaker ones.  I happened to have worked for a couple of them. I can tell my fellow Guyanese, they are not going be too enamored of having this type of expensive discussion in the first place, but they prefer to have it than not have it.

For sure, this would involve the kind of annual insurance premium spread across a consortium of underwriters of a number on the high side of hundreds of millions at least, if not going into that number beginning with a big B. If not, then a reserve for a contingent liability of at least a few billions in the kitty for a start; the positive would be that the funds are still in-house and under ‘restricted management’, so to speak.  Whether it is US$5 billion or any amount north of that, depends on the wisdom versus the greed at that meeting.

In other words, costs versus profits versus exposures; that is what the pipe that has to be smoked holds.  As an aside, this is why the Exxon people were fudging about and balking all along, while having our own dear Vice President support them in the process, and beat back challenges in the local environment.  But here is the last line: not one of those multi-billion shareholders of Exxon is too keen on being caught without that insurance hedge to protect their huge investment, which could be reduced to nothing should a catastrophic oil spill occur offshore Guyana.  There will be some provision coming out of that AGM, just how much is agreed upon will be forthcoming soon enough.  Just to ensure that all and sundry get my point: there will be some decision to obtain significant coverage, or make corresponding balance sheet provision, for insurance protection for Guyana.

This is what a former President of this Republic was floating all over the place about; and, worse still, flaying away at the few Guyanese who had dared to stand up and assert: please let us have the proper level of insurance coverage, and the more the better.  If not, then all those billions of barrels of known (and possibly more billions to come later) could all be meaningless, as in wiped out, should a cataclysmic oil spill occur out there.

This same insurance coverage was what created quite a sturm and drang in the National Assembly of the Guyanese people.  It was where, like the Hon. Vice President, there were those indescribable (a euphemism) Guyanese lawmakers who made utter international disgraces of themselves fighting other Guyanese, over insurance coverage from ExxonMobil, USA, not Esso Guyana.  The PPP Government MPs were fighting on behalf of America’s Exxon, and not for what accrued to the interests, benefits, protection, and peace of mind of every single citizen of this country.  I am tempted to ask how they feel now.  But that is giving them too much credit; better to ask them to look in the mirror (Exxon’s).

I depart on this note.  I know the people at places like Fidelity and Vanguard.  They don’t want that degree of exposure on their hands. That is good for Guyana. I wanted to address this 12% Exxon stock plunge, but have to hit the pause button for now.

(The views expressed in this article are those of the author and do not necessarily reflect the opinions and beliefs of this newspaper and its affiliates.)

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