Dear Editor,
In discussing Guyana’s nightmare oil deal last week, Winston Jordan predicted that Guyana will get “two hundred and something million” US dollars in 2020. He referred yet again to a “2% royalty.” As we all know, the APNU+AFC coalition sometimes has a problem with simple arithmetic and went all the way to the Caribbean Court of Justice to find out that 33 is more than 32. Perhaps it is sensible to check Mr Jordan’s numbers.
Oil companies usually pay royalties on the petroleum produced. But the Petroleum Agreement signed by Raphael Trotman states (Article 15.6) that this royalty is paid on “Petroleum produced and sold.” Esso and partners will take for free as much production as may “reasonably be required” for their operations. There won’t be any royalty on that. From what is left, they will take 75 per cent for their costs. No royalty on that. They take 50 per cent of what is left. If they sell it, they pay 2 per cent based on a value set by the Petroleum Agreement not the international oil price. But suppose the oil companies don’t sell the oil but refine it and sell the end products instead (gas, diesel etc)? What happens to Guyana’s royalty? Two per cent of nought is nought. Would Mr Jordan and Mr Trotman please tell the Guyanese people the truth?
Using Mr Jordan’s figure of US$50 a barrel, a crude calculation suggests that selling 400,000 barrels of oil would give US$200 million. But the government does not know how to sell oil. The Petroleum Agreement says the oil companies can sell the oil for Guyana, provided that Guyana pays their costs and a marketing fee. Obviously, Guyana will then need to sell something more than 400,000 barrels to get US$200 million in hand. Unfortunately, this supposed US$200 million is not really revenue because Mr Trotman, without any discernible legal authority, agreed that Guyana will pay the oil companies’ pre-contract costs. The first lot of costs that Guyana owes the oil companies is tucked away in Annex C, Section 3.1(k), and is US$460,237,918 – more than double Mr Jordan’s unsubstantiated estimate of US$200 million.
Mr Jordan was quoted as saying that, “We do not have a billion unless it accumulates over years.” Maybe, not even then. But the oil companies will get more than a billion dollars in the very first year because the government is giving these companies more than seven times what the government kept for Guyana. Why did the government give away Guyana’s natural patrimony? What were all those lawyers in Cabinet doing? Was there no lawyer in or out of Guyana whose advice government could have sought? (Remember the government’s silly excuse about keeping the signature bonus secret to pay lawyers to go to the International Court of Justice?)
Mr Jordan says everybody was “shooting in the dark” on the Petroleum Agreement. This excuse would seem unsurpassable in its fatuity were it not for Mr Trotman’s attempt to duck responsibility on the grounds that the GGMC told him that the Petroleum Agreement was ready for signature. Mr Trotman certainly cannot blame the GGMC for his utter failure while he held the portfolio of minister with responsibility for petroleum. Did it not occur to him to read the Petroleum Agreement? If he didn’t understand it, then why did he sign it? And with what legal authority?
In a well-written article in this paper, Transparency International Guyana Inc said that the Petroleum Agreement, “appears to be the result of either grand corruption or grand incompetence.” Well Mr Jordan and Mr Trotman – which was it?
Mr Jordan proffered “context” as another excuse. The one context that neither this government nor their parliamentary colleagues in the opposition appear to grasp is that the planet is undergoing catastrophic global warming caused by greenhouse gases. Your readers already know about extreme weather events, vast fires in the Arctic (the coldest place on earth), ocean acidification, rising sea-levels etc. The safe concentration of greenhouse gases in the atmosphere is 350 parts per million (ppm). It is now 415 ppm. There is no justification for the government to let anybody take any of Guyana’s oil. Furthermore, this proposed oil production violates Guyana’s international legal obligations, including the Paris Agreement, as well as constitutional rights to a healthy environment and intergenerational equity.
I have used “Mister” rather than “Minister” in this letter. Article 106(6) of the Constitution says, “The Cabinet including the President shall resign if the Government is defeated by the vote of a majority of all the elected members of the National Assembly on a vote of confidence.” They were so defeated. Democracy and decency require this country to respect the Constitution above politicians and to put the rule of law above the rule of men.
Yours faithfully,
Melinda Janki
