Increasing oil income

Feb 08, 2024 Editorial

Kaieteur News – Guyana’s political opposition is now on record saying that increasing oil income is a national priority for the group. According to Opposition Leader, Aubrey Norton, “We, on this side of the House, view it as a national priority to increase oil income through tighter audits and monitoring to prevent financial leakages, building our human capacity to monitor oil operations, and the employment of expert firms to advise the government.” We commend the Opposition Leader for his straight talk on Guyana’s oil patrimony, and what this nation could get from it, if the areas he outlined are implemented quickly and seriously.

Much can be said for comprehensive and credible audits, monitoring (possibly through systems) to look out for our interests, plus pushing ahead vigorously with human capacity development and, last, expert firms for guidance purposes. Our position is that there can be significant cost savings with bona fide efforts in every stream of activity that Mr. Norton tabled in his call for urgent action by the government. In each of the four segments of scrutiny and oversight that he identified, national oil income could be increased. In our basic projections, hundreds of millions of American dollars annually could be the difference in each instance. Unless proper oil meters are obtained by Guyana, installed by Guyana at the right checkpoints, and monitored by Guyana, no Guyanese has a clue about how much oil ExxonMobil is really producing daily. We make the bold prediction that it could be many more barrels than reported to Guyanese authorities, leading to billions lost through the absence of the necessary technology, and hands-on human involvement. The presence of both would provide the protections that this country needs to get the most out of its oil wealth. There is a higher chance that Guyana would do better (save more, and correspondingly earn more) than it is doing currently. Some of the “financial leakages” of which the Opposition Leader spoke could be plugged.

That said, we think that Mr. Norton targets low-hanging fruit in the areas he pinpointed. They have monetary benefits, and they are not insignificant. We prioritize ring-fencing oil projects, which would be favourable to this country’s oil income receipts by the billions. The same goes for capping interest rates, with more billions coming to Guyana. Further, clear and complete disclosure of all oil expenses would give Guyanese the knowledge that they lack now on where there may be expense shenanigans and their impact on the level of oil income due.

One insight that we have gained from our coverage of the ballooning oil sector is that when ExxonMobil doggedly objects, then hundreds of millions, possibly billions, are in it for the company. When ExxonMobil advances arguments that clearly serve only the company’s bottom-line, that emphasizes how Guyana is getting roasted. This is where we would recommend that the Opposition, and every other Guyanese, focus their attention, for it is where the big money is, where the big games being played with oil projects are skinning this nation alive. Along the same lines, we have observed that when some aspect of the oil operations has to be a tightly guarded secret, then Guyana is paying a heavy price for that secrecy. A lid of secrecy has been the case with billions in expenses, which is shocking when key leaders in the host country agree to that secrecy.

ExxonMobil has claimed that its accounting records, systems, and practices are outstanding. Yet audits have revealed the troubling with hundreds of millions in questionable expenses flagged. It is fair to contemplate what forensic audits worth the name would have likely uncovered. This is where the probability exists of expense skullduggeries to the detriment of Guyana are alive and well. How else to rationalize ExxonMobil being so steely in resistance to the expense disclosures? Disclosures that the people of Guyana need so much to appreciate for themselves that they are getting a fair share, and that ExxonMobil is a genuine and trusted partner. We see no loss of competitive ability. What we detect is another apparently ripe area for the “financial leakages” of which Mr. Norton spoke, to occur. Expenses stand as another big one where the priority and focus should be.

Guyana, Guyana’s oil patrimony, oil expenses would give Guyanese, Opposition Leader

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Increasing oil income

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Increasing oil income

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