United States based commentator Arthur Piccolo has stated that Guyana’s situation in relation to the oil deal with ExxonMobil is equivalent to colonialism. The article entitled, ‘Is Guyana Being Screwed by Exxon?’ was published by New Americas.
In the article, the commentator on Latin American issues wrote, “The country is large in landmass and forest resources but small in population at 800,000 and is one of the poorest in the world. At the same time Guyana now has the fastest growing economy on Earth because of the massive oil wealth recently discovered just off its shore.
This is good news for Guyana as long as you are OK with the massive exploitation of Guyanese taking place at the hands of oil super giant Exxon, and either corrupt or clueless Guyanese government officials.”
Piccolo wrote, “This is another potent example of colonialism that is alive and well in the Caribbean and that undermines the integrity and the potential of the Caribbean.”
In another powerful reference to colonialism and corruption in Guyana’s government, the expert wrote, “Yes, Guyana is going to realize tremendous income it never had before in the coming years from this deal. But is that good enough? There is a name for what is taking place – it is called COLONIALISM. The rich and powerful lord it over the weak and the poor. And as always happens in these cases, the powerful either buy off those who can stop them, or the local officials are so stupid, the rich and powerful can get away with anything.”
With reference to Exxon’s Profit Sharing Agreement (PSA) with Guyana, the expert wrote, “There is a technical term for what took place – a SUCKER DEAL!”
In his article, Piccolo explained why the PSA between Guyana and ExxonMobil is lopsided and grossly unfair to Guyanese.
The expert wrote, “The deal Guyana signed with Exxon splits the income from this huge oil field 50% to Guyana, 50 % to Exxon. Think that sounds fair. [But that is] Wrong. It is a sucker deal no nation should have ever made. The deal should be 75% to Guyana and 25% to Exxon and indeed Guyana could have negotiated even better if it was serious 80% to Guyana. What is the difference for Guyana? Hundreds of billions of dollars lost to Guyana that Exxon will add to its huge profits for no good reason at all.”
Piccolo underscored additional problems with the PSA. The expert made the following points:
- “In 2016, after the discovery was announced, Exxon and Guyana amended the original exploration deal they’d signed in 1999. The new contract, which split the oil revenue 50-50, with a 2% royalty paid to the government, struck industry analysts as an unusually sweet deal for Exxon.”
“It’s the most favorable I think I’ve ever seen in the industry, anywhere,” says Tom Mitro, a senior fellow at Columbia University’s Center on Sustainable Investment.”
- “Exxon defends the contract, saying that it took on significant risks by gambling on a country with no history of oil production and very little energy infrastructure.”
“The terms of our petroleum agreement with the government of Guyana are common in the industry and competitive with other countries at a similar stage of resource discovery,” a spokesperson for Exxon says.”
“But the terms with Guyana were drawn up after the discovery had been publicized as being unusually large. “Exxon makes the argument that they didn’t really know how much resource was there,” Mitro says. “Well, they did.””
- “According to Rystad Energy AS, an Oslo-based consultant, the global average for a government’s take in offshore projects is 75%.
ENCORE … “According to Rystad Energy AS, an Oslo-based consultant, the global average for a government’s take in offshore projects is 75%.”
In fact, with an oil field this large and easy to drill Guyana should have done even better!”
- “The sheer geographic size of Exxon’s lease – 26,806 square kilometers (10,350 square miles) – also matters. It’s about nine times larger than Exxon’s average international offshore lease, Mitro has calculated, and roughly 100 times larger than the average lease in the Gulf of Mexico.”
- “The Guyana contract includes an unusual provision allowing the company to immediately recover costs for additional exploratory work anywhere within that area. Exxon effectively pays itself back for those costs out of the oil that otherwise would go to the government. Most production-sharing agreements covering large areas allow such deductions only within small, specified areas, Mitro said, not everywhere under lease.”
- “That is enough. I am sick from writing about this abuse.”
- “CARICOM, the union of Caribbean nations, is celebrating its 50th anniversary in 2023. Time for CARICOM to step up and end this kind of abuse of its member nations.”
- “It is time to force Exxon to renegotiate its deal with Guyana. A fair deal!”
Arthur Piccolo’s observations may be viewed within the context of the realities that exist in Guyana.
In a recent interview with Al Jazeera, President Irfaan Ali said that Guyana’s confirmed oil reserves are far more than 11 billion barrels. In that same interview, though, President Ali brushed aside and dismissed any discussion of the fact that 48 per cent of Guyanese live in poverty.
