There are so many metrics through which the odious deal wangled by ExxonMobil from the APNU+AFC government in 2016 can be examined and exposed for what it is – pure rapaciousness facilitated by this government.
Another occasion presented itself on Thursday when the US company’s subsidiary, now styled as ExxonMobil Guyana Limited (EMGL) presented its annual report for 2023. It was done in the format of the glossy annual reports that the Guyanese shareholding class has become accustomed to. It was as if EMGL and ExxonMobil were trying to cloak themselves in the raiment of the average bank or beverage manufacturer here. Nothing could be further from reality. The figures demonstrate that nothing in British Guianese or Guyanese economic history is comparable to the ongoing pillaging of the country’s oil resources.
EMGL’s revenue for 2023 at just over one trillion Guyana dollars was just under the size of Guyana’s entire historic, trillion-dollar budget for 2024. Just consider that once more. All of the outlays to each and every ministry and sector – education, public works, health, agriculture, local government – in the 2024 budget when totted up was just a tad above the revenue that EMGL scored off of Guyana’s oil. Worse, that was only EMGL’s portion. When account is taken of Hess’ and CNOOC’s stakes, the revenues far outstrip Guyana’s budget, a mind-boggling representation of the meek surrender of our resources. Again, what leverage does ExxonMobil have on Guyana’s decision-makers? It cannot just be the stability clause in the 2016 PSA.
Revenues aside, EMGL declared a whopping net profit of $614.6b for 2023, up by $36.9b compared to 2022. This profit was just under two-thirds of the size of the Guyana budget for this year. So even while the Guyana economy has expanded at stratospheric rates, ExxonMobil’s boom – as has been exhaustively argued over the last five years – is even better. This performance by EMGL is derived from only three oil producing platforms – one for a small part of last year. EMGL plans six platforms by 2027 and would like to have as many as 10. One cannot begin to imagine what the scale of its revenues will be in 2027 as Guyana is locked to a 2% royalty when there should have been a rising scale linked to increased production in the Stabroek Block.
Also of note in the report was the huge increase in exploration costs over the period, highlighting the company’s aggressive programme and further deferring increased profits to Guyana.
Exploration costs in 2022 were pegged at $8.74b and this figure zoomed to $55.49b last year.
Guyana should have had some say in the scale of the exploration budget but it remains on the sidelines while EMGL examines every nook and cranny in the Stabroek Block before having to relinquish acreage back to the state.
With every day that passes, the blame for enabling this wholesale carting off of Guyana’s resources by ExxonMobil and its partners becomes the burden of this PPP/C government. APNU+AFC solemnised the original abomination in 2016 but it is the current government that has presided over nearly four years of oil production without turning the screws on ExxonMobil to make it return to the negotiating table. Its excuses are risible. The investment climate and contract sanctity are often trotted out. It remains the case, however, that at any number of points on the approval process for oil operations, Guyana can make it clear to ExxonMobil that it must have a larger share of its own resources and that a material change to the 2016 PSA is mandatory. It is however not doing this.
The government has also failed to devise a robust regulatory framework for the oil and gas industry. December 2024 will mark five years of oil production yet there is still no Petroleum Commission. ExxonMobil pretty much decides what it wants to do. The audits of its claims for expenses have been nothing short of scandalous and remain unsettled to this day. The jury is still out on whether there has been an unacceptable inflation of its claims. The ability of the Environmental Protection Agency to do its job remains in question and so too is the insuring of the oil operations in the Atlantic. The government has inexplicably joined ExxonMobil in contesting a landmark High Court decision that would have protected Guyana from any spill offshore.
Yet, here in 2024, the government is locked in a bitter struggle where teachers are asking for the constitutional entitlement of collective bargaining and salary increases. A strike has gone on for more than two months and children and their parents are suffering from the ongoing learning loss and dislocation. Not only is the government not superintending the oil sector properly but it also exudes disdain and inflexibility to local demands for a fairer distribution of the proceeds from this new-found wealth.
In the 2025 elections, the government’s role in not defending the revenues that should rightfully be assigned to this country will be a key campaign issue. It’s something that President Ali must cogitate on. He is fully answerable on this matter.
