Opposition Leader Bharrat Jagdeo on Friday called for the release of the inception agreement between the Guyana government and ExxonMobil, while criticising the David Granger-led administration for politicising the country’s oil prospects and selling unrealistic dreams to its citizenry.
“If you are going to snipe at the PPP, make the entire contract public so that we have a chance, in the public domain, to defend the original contract and the time it was signed too,” Jagdeo told a press conference on Friday.
“It was our government but that [contract] doesn’t belong to Jagdeo. It belongs to the Government of Guyana. I don’t have a copy. I do not have a copy… It was signed at a time when we were begging people to go and explore out there. You cannot take one element and use it… in a politicised manner,” he added.
There have been calls for the government to release the inception agreement with ExxonMobil, which was was signed by the then People’s Progres-sive Party/Civic government in 1999. The agreement catered for a subsumed 1% per barrel-of-oil royalty but this was changed by the David Granger administration and will now take a hybrid format where royalties of 2% per barrel will feature.
“We made some adjustments with the Exxon contract,” Minister of Natural Resources Raphael Trotman told Stabroek News last week. “It was 1% paid for by the government. That was inherited. It is now 2% on the gross so we have made a substantial increase,” he added.
But Jagdeo on Friday accused Trotman and by extension his government of “cherry picking aspects of the contract” to make itself look good and to play down the role the PPP played in signing the original agreement.
“They have made attempts to politicise the issue—that PPP might have negotiated a smaller 1% royalty and they are doing better. In the absence of making the contract public, we think he is cherry picking,” he said.
“Trotman dangles before the public that they are doing what is best for the country and they alone should know—nobody must know, not the opposition, not civil society, not the international community—and that they are doing better than what the PPP did. This is in hopes that we should all have faith in him and the government. Well I don’t! Given the level of incompetence they have demonstrated. Trotman cannot have both ways. What he does is, he goes around talking up the future of this industry, as though it is going to solve every problem in Guyana, and that there will be massive flows of resources. They are nowhere. Yet it is out there that this will be a saviour for Guyana…it is not going to happen. They are talking up expectations. My worry is that when these expectations do not materialise, then somebody gets blamed and with this government they always blame someone,” he added.
He said that with government boasting that it had upped royalties from 1% to 2%, it also needs to show what guiding factors were used in reaching the agreement that the latter figure was enough.
“If you are going to change one element, release and say ‘This is what we have done.’ We need to know how. Say, ‘We have seen around the world these are the royalty rates around the world.’ Put up a paper and say to the country, ‘These are the countries, that is what they get, this is why we believe that based on this royalty rate it [Guyana’s] is fair when compared to the others,’” he advised.
Jagdeo recalled when the PPP took office in 1992 and there was an existing contract with Omai Gold Mines that saw the country getting 5% in royalties. “The earlier days when we looked at Omai, we got PricewaterhouseCoopers to come and look at other regimes and they found the 5% was a fairly decent price and we left it. They had given us a mining rates and royalty rates around the world and we used that as a guideline,” he noted.
Further, Jagdeo said the Granger administration was playing up the economic possibilities from anticipated oil revenue to score political points.
He added that he does not want to have a public confrontation with government over the sector as he believes it is a sensitive one. He explained, “The oil and gas contract itself, we have seen a number of statements by the minister and I have said in the past that I do not want to conduct the nation’s business on this industry in the public domain. I would prefer it be treated the way we treat our border matters; that we have a bipartisan approach to this industry, particularly, for what it means for Guyana in the future and we do not, in the middle of negotiations, seem that we have contradictory positions. “
He later said, “All I am asking for is a nonpartisan [approach] to the oil industry. What the ministry is doing is talking up expectation of this future massive wealth that will solve all our problems. Anything could happen. So what if in 2020 the price of oil goes down and is US$20? Don’t tell me about projected demand, there is short run and long run. In 2014 the price plummeted. I am hoping we get US$300, that is my hope as a Guyanese but… it is this realism I’m trying to get people to understand. What is projected to be earned, there is a possibility it could be less. There is that real possibility. Oil could be a blessing or a curse.”
Jagdeo said that the heart of the matter, to him, was that transparent and sound systems need to be put in place to ensure that the citizenry positively benefits from oil revenues garnered.
He said that while government touted local content legislation, creation of a Sovereign Wealth Fund and other policies to ensure a sound oil and gas sector, he thinks that there will be a sloth in bringing them to fruition because he believes the government would want to use the money for its own purposes.
