Dear Editor,
There is every need for the transparency and accountability advocated for in the guest editorial, “Exclusionary Democracy” on 18th December. But it is delusionary to talk about the ‘magnitude’ of oil revenue for Guyana. As the fishermen, workers, market vendors and ordinary people who live here know, oil is making Guyana poorer, not richer. This daily reality is well illustrated by Monday’s ‘In the Diaspora’ column. The exploitative production sharing arrangements combined with abusive tax provisions give ExxonMobil, Hess and CNOOC about 90% of Guyana’s oil. For now, Guyana gets its little 10%. But in the future Guyana faces massive costs and liabilities. At the end of production, the oil wells must be decommissioned i.e. permanently shut down and securely capped so they do not leak and pollute the Atlantic Ocean. The world is moving away from fossil fuels. The pace of change is getting faster. Decommissioning could become necessary sooner than people expect.
Esso Exploration and Production Guyana Ltd (Esso) is already taking out the money for decommissioning. A financial report by the global think tank IEEFA shows that by 2024 Esso will have deducted US$227M for decommissioning in Liza 1 alone. Obviously, Esso will keep on taking out decommissioning money for as long as it can. But there is no guarantee that Esso will produce this decommissioning money when the wells have to be shut down. Despite benefiting from an egregiously exploitative petroleum deal, Esso has still managed to make a loss of G$6.5 billion according to its 2020 accounts. There isn’t even any guarantee that Esso will exist at decommissioning. The oil industry is known for leaving host countries to clean up its mess. ExxonMobil could wind up Esso and walk away leaving Guyana to pay for decommissioning.
The wells are ultra-deep and very dangerous. Decommissioning is expensive. The IHS Markit Report 2021 estimates it will cost US$3.1 billion to decommission the Liza and Payara wells. Clearly the government, as servants of the people of Guyana, have a duty to ensure that the Guyanese are not left to pay US$3.1billion (roughly G$651 billion) or more for decommissioning. The government must therefore ensure that Esso puts this decommissioning money into an escrow account to pay for decommissioning and nothing else. There is little choice. Guyana has international legal obligations to prevent transboundary environmental harm. If these ultra-deep wells are not shut down safely, Caribbean countries may well look to Guyana for compensation for damage from oil pollution, methane leaks etc.
The lie of oil wealth has been repeatedly exposed. The immediate national task is to protect Guyana’s people from the stupidity and cupidity of politicians who are putting the interests of foreign oil companies above the well-being of the nation and above the well-being of our Caribbean sisters and brothers. Otherwise, as I have previously warned, the Guyanese people will have to find billions of US dollars to shut down these oil and gas wells. And could end up liable for billions more in compensation to the Caribbean.
Sincerely,
Melinda Janki
