Guyana treading dangerous path by ignoring experts’ advice on management of oil sector – Dr. Vincent Adams

Nov 28, 2023 ExxonMobil, News, Oil & Gas

Kaieteur News – As a new petroleum producer, Guyana’s oil and gas sector is constantly under scrutiny by independent international experts. These experts oftentimes offer recommendations to this nation for the prudent management of its resources, using the perils of other nations as cautionary tales this nation should avoid.

Former EPA Head, Dr. Vincent Adams

In response, the Government of Guyana (GoG) has been dismissive and has so far refused to heed the suggestions proffered by the International Monetary Fund (IMF), the Commonwealth and even the Institute for Energy Economics and Financial Analysis (IEEFA) just to name a few.

Though the government has accepted on numerous occasions that it lacks the necessary capacity, it is determined to manage the sector as a “one-man show”. This is according to former head of the Environmental Protection Agency (EPA), Dr. Vincent Adams.

In a recent interview with this publication, Dr. Adams, a Petroleum and Environmental Engineer said this nation is treading a dangerous path by ignoring the advice from these experts on the prudent management of its oil resources.

ExxonMobil Guyana Limited, the operator of the Stabroek Block, has unlocked an estimated 11 billion barrels of oil offshore Guyana. The discoveries are however tied to what is now known across the industry as the “worst oil deal”. Consequently, a number of experts have offered suggestions to ensure Guyanese enjoy the benefits from their patrimony.

According to Dr. Adams, “What is playing out is very irresponsible governance and it all comes down again to accountability and the sad part of Guyana is its politics…it’s clear that there is no accountability and I say it’s clear because we hear it coming from (Vice President Bharrat) Jagdeo and all the rest of them that we do not have the capacity, but what are they doing to even build the capacity?”

He argued that a responsible government, that is truly focused on the development of its country would have been taking note of the experts’ advice to improve the lives of their people, currently living on no more than $1,000 per day according to the most recent World Bank findings. To this end, he warned, “We are heading down a path here that is not good for the country and the reason is because they (government) can get away with it. There is no accountability whatsoever that they need to worry about so that’s how they are governing.”

The former EPA boss pointed out that there seems to be no strategic plan by the administration as there continues to be talk of new projects daily, like the Gas-to-Energy initiative. He was keen to note that while the project can be beneficial, the government took office and decided to spend billions without first conducting a feasibility study. As a result, Dr. Adams believes investors are unsure about their returns and have withheld a Final Investment Decision.

In January this year, it was reported that President Irfaan Ali downplayed the advice of Commonwealth and the IMF when he was faced with questions from this newspaper.

The Commonwealth Secretariat, of which Guyana is a member country, had issued a report that warns of the various ways oil producing nations can be robbed by petroleum companies when it comes to decommissioning or cleaning up the environment, following the life of an offshore project.

Despite this, President Irfaan Ali said he will not respond to any question on advice given by the agency.

Additionally, he was told that several oil experts and international bodies have criticized the way his administration is managing the petroleum sector and the IMF had warned that Guyana should cap the interest rate on the oil companies to avoid them robbing the country.

The IMF said it is an industry norm that the Government of the day disallows interests from being recovered on loans. Even if this is allowed, the administration sets a cap or limit to prevent the full interest amount from being recovered.

The IMF pointed out that Guyana not only allows the recovery of the interest but also sets no cap. Guyana has also waived its right to tax such interest amounts.

Similarly, the President was told that the Commonwealth also issued advice to the country, but before the question was completed, he interrupted and requested that the direct quote be pulled from the reports.

A senior journalist attempted to respond to the President however he said, “Well, I can’t answer you. You quote directly for me…quote for me what the IMF said in relation to Guyana. I will answer you directly. Then also, the Commonwealth, there are many oil experts also who are writing about the performance of Guyana who have lauded the Government of Guyana for the way we are handling the oil and gas sector for our work in terms of utilizing the administrative mechanisms for work in the new (Production Sharing Agreement) PSA, for our work in going out to auction on the new (oil) blocks, so what is it you want? What is it we want exactly?”

The Director of financial analysis at IEEFA, Tom Sanzillo has compiled a number of reports on Guyana, however VP Jagdeo has not only dismissed those but has questioned the integrity of the agency during multiple press conferences.

• Dr. Vincent Adams, Guyana, Institute for Energy Economics and Financial Analysis (IEEFA), International Monetary Fund (IMF), Petroleum and Environmental Engineer