Dear Editor,
I write with reference to your lead article of March 18th reporting: “The visiting chairman of the all-powerful US House of Representatives Ways and Means Committee, Jason Smith has underlined the need for expanding American participation in the Guyana oil and gas sector and to outcompete China in this arena”.
Congressman Jason Smith: Welcome to Guyana. The Guyanese diaspora in New York supports US government policy “to outcompete” China in the Western Hemisphere. Towards this end, we urge you to raise the option of a Guyana Government buyout of the shares of CNOOC. As per the Exxon Contract, all loans and interest the Government of Guyana may take to achieve this goal are paid for from Oil Revenues.
Mr Routledge, Exxon’s Guyana president says Oil Companies have pumped US$30 billion into this project. Most of that money is borrowed. Who pays the interest? It is all paid for from the Oil Revenues. Not from Oil Companies’ profits.
All CAPEX (Capital Outlays) are paid for in the 75% capped CR, Cost Recovery
All interest on CAPEX are also paid for in the 75% capped CR.
Congressman Smith, the contract is egregiously lopsided in favour of Exxon. Two percent Royalty is below industry standards. Suriname’s PSA contract provides for 6.25% royalty.
On the Royalty alone, on 11 billion barrels, Guyana loses/foregoes $35 billion. [11 BB times 4.25% times Av price per barrel $75 = $35 billion]
Oil Companies also pay no corporate income tax on profits made in Guyana but pay tax to US government.
Congressman, permit my repetition for emphasis: How can Exxon be required to pay tax on profits made in Guyana to their home government, USA, but not to the host country where the profit is made? This is an unbearable insult to the Guyanese people. How did this happen? And, why can’t the contract be renegotiated to permit the removal of this insult to the Guyanese nation?
We know for a fact that the contract was not negotiated – but signed. Then Minister Trotman told the Guyanese press he had been instructed to sign. This contract came into being through underhand – possibly illegal – manipulations of leaders in the government.
The Government of Guyana has refused to ask for renegotiation based on political considerations, not based on the intrinsic unfairness of the fiscal items in the contract.
Congressman Smith, would you be kind enough to make a declaration on this matter. I am Guyanese-born and have lived in the United States for the last 50 years. I do not believe U.S. foreign policy works like that – at least not since the Church Committee hearings of 1970’s.
Congressman Smith, it is not possible for you to travel to Guyana and not know that the Guyanese people have been agitating daily for their government to demand renegotiation.
Congressman Smith, I appeal to your good offices and good conscience to speak to the unfairness of the contract imposed on the Guyanese people and to the fears of the leaders of the Guyanese Government. Please Sir, make a statement to dispel those fears.
Yours faithfully,
Mike Persaud
