In his September 25th interview with the New York Times’ International Climate Correspondent, Somini Sengupta, President Ali trotted out his standard argument as to why there should be no qualms about Guyana’s unrestrained extraction of oil and the envisioning of a future for the industry here past 2050.
He contended that Guyana has a larger forest than England and Scotland combined, stores 19.5 gigatonnes of carbon and can sequester 153 million tonnes of carbon annually.
As has been pointed out before in these columns, the fact that Guyana has such a high forest cover is not intrinsically linked to any particular action that PPP/C governments have taken. Indeed, at various points of our post independence history there has been reckless abandon such as the activities of Chinese logging company Baishanlin and others which engaged in large scale exportation of logs under the Ramotar administration. Indiscriminate gold mining has and continues to contribute to significant deforestation. The plans for an all-weather transportation corridor to Lethem can also have a significant impact on forest protection.
The ancient forests that cover these lands are not available to this government as leverage or offsets for its carbon spewing plans. They have been here from time immemorial and have nothing to do with the PPP. The President must increasingly avoid the 19.5 gigatonnes argument and consider the 2019 start of oil production as the baseline for consideration of Guyana’s emissions performance.
What the President should be recognising are the dangers posed to climate change from Scope 1, 2, and 3 emissions and the need to comply with the commitments Guyana has given under the Paris Treaty as it relates to Nationally Determined Contributions (NDCs). Guyana must be well off track of its NDC commitments given the hurried mobilisation of the Turkish power ship at 36 megawatts drawn from heavy fuel oil (HFO) with plans for another 60 MW of HFO due to a combination of poor planning and questionable maintenance of generators here. The President also cannot be oblivious or insensitive to the fact that roughly 645,000 barrels of Guyana oil per day is being burnt somewhere in the world and contributing to climate jeopardy. Then there is ExxonMobil’s flaring in the Atlantic. This administration refuses to develop an oil depletion policy and is aiming above one million barrels a day. Saturday night’s ferocious thunderstorm over the city in the midst of this dry season was a timely signal microcosmically of what the planet faces while ExxonMobil and partners chart the draining of this non-renewable resource.
There were other parts of the interview where the President was plainly incorrect. Mr Ali was asked if there had been full consent from the indigenous people for the carbon credits deal with oil company, Hess. He replied in the affirmative and said that the National Toshaos Council which encompasses toshaos from all villages had given its approbation. It has already been pointed out by many commentators that approval has to be derived at the level of the village council and such permission has not been attained from all of the villages concerned.
When Norway was cited by Ms Sengupta as an exemplar, the President was quick to seize the opportunity to highlight Oslo’s forest conservation relationship with Guyana.
“On the topic or Norway, we have done such an exceptional job at the environment that we are the first country to sign…a bilateral agreement and that was with the Kingdom of Norway for carbon credit and for the safeguarding of our environment for more than 270m US dollars…”, he said. This was not the case, a year before the Guyana deal Brazil had secured a similar pact with Norway. Guyana’s deal was for US$250m, not US$270m. The President should also be aware that Guyana lost around US$20m from the deal because deforestation – due to gold mining – rose above the benchmark that had been set.
More significant about the Norway discussion was the President’s total avoidance of Ms Sengupta’s repeated questioning of Guyana’s taxing of the petroleum industry. His silence was no doubt linked to the outrage that ExxonMobil pays no tax here but is able to claim that it is paying.
What would no doubt have raised eyebrows was the President’s unsupported claim about Guyana’s transitioning to renewable power after being challenged by the journalist on hydro and wind energies. He stated baldly that the country is very committed to transitioning to renewable power and is doing it at a pace that is more rapid than anyone else. That can clearly not be the case considering the expanding use of HFO and natural gas-fuelled generators ranged against the small number of solar farms, household panels and tiny hydro projects being developed.
Ms Sengupta helpfully suggested that the mobilising of financing could be an issue in transitioning. The President agreed: “I am saying that the developing world is facing an immense challenge to raise capital for all of these things and if you look at a country that is transitioning. We said that we are going to build two power plants with natural gas, that is a transition, that is reducing the carbon footprint from petroleum products to natural gas”. The Ali administration clearly has the financing available to it for a swifter push to non-renewables but is either unable or unwilling to do so.
When pressed on the fairness of the 2016 Production Sharing Agreement with ExxonMobil, the President plied his listeners again with the shibboleth of “contract sanctity”.
He said that his government inherited the oil agreement and as leaders they have to consider sanctity of contracts and questioned whether he could just abandon the contract because then “right on this stage you will say there is a tyrant and dictator in Guyana who does not respect contracts. Who does not respect the sanctity of contracts. And then you might hear that Guyana will be called before every commission globally”.
He said his government is focusing on how it can maximise the provisions of the inherited oil contract to the benefit of the country and environment.
“You have inherited this deal, was it a bad deal?” questioned the journalist.
“I have said it a number of times, they had the better hand of the deal,” the president responded.
“Okay, is there any universe in which you would renegotiate this deal or is that off the table?” the journalist then asked.
‘So, we have said all future PSAs (Production Sharing Agreements) will be different…all future production sharing agreements will be different. This is now the standard. We have already drafted new PSAs through consultation and expert advice…and if you examine the new PSAs you will see that there are substantially different from what the consortium enjoys. And that is the fact…” the President said.
The constant use by this government of the term “contract sanctity” is a vulgarity in the context of a PSA that caters for both sides agreeing to revisit terms and in light of the various options open to the state to protect the country’s patrimony.
Increasingly these international interviews will find the government at odds with best practices in terms of oil and gas governance and climate rectitude. The President needs to revisit the narrative he has now become accustomed to delivering.