When one surveys the oil and gas landscape, it is immediately evident that the odds are stacked in favour of the companies extracting the country’s resources and commensurately against the interests of the people. In the absence of a well-developed regulator, it would have been expected that the governments that have engaged with ExxonMobil and its partners would have performed the interim role of the balancer. This was not the case for the APNU+AFC government nor so far for the PPP/C administration. To the contrary, these governments have operated more like co-partners of ExxonMobil et al.
In the five years it presided over the petroleum sector, APNU+AFC will be remembered for the notorious 2016 Production Sharing Agreement (PSA) with its appallingly poor financial terms, a paralysing stability clause and a paltry signing bonus which was really intended as a payment for legal fees in the pursuit of a resolution of the Guyana-Venezuela border controversy.
One could not even describe the PSA as a “negotiation” when one considers that Guyana did not have a single suitably qualified negotiator on its side to match wits with ExxonMobil, long known for its ruthless approach to deal-making with minnows like Guyana. The APNU+AFC administration allowed the expiry of its term in office without the key proposed regulatory body, the Petroleum Commission in place and failed in its attempt to orchestrate the pivotal Natural Resource Fund.
The approach of the PPP/C government has hardly been different. It has made clear that the unjust 2016 PSA will not be revamped even given the fact that a pre-oil PSA had been only “tweaked” to govern major and continuing petroleum discoveries and that the government would have been able to mobilise domestic and international support for its restructuring. The PPP/C administration has simply abdicated its responsibility in this area and it must be wondered whether it had given a pre-election commitment to ExxonMobil that the agreement would not be altered. The 2016 PSA will remain a sore point for the country and ExxonMobil and its partners should be made to agree to pay corporation tax, elevate the paltry royalty rate and institute ring fencing of the costs of its productive and exploratory wells.
Immediately on entering office in August of last year, the PPP/C government was confronted with the task of making a major decision on the Payara project which will become Guyana’s third producing well in 2024. Despite admonitions from some in the industry that the country should seek to slow down the pace of planned exploitation to ensure environmental and safety concerns are taken full account of and to use the required permissions for better terms, the government proceeded at breakneck speed to deliver the required licence which was signed on October 1st – very swift considering the pace at which this government moves on other matters.
Despite the hiring of a high-profile Canadian consultant to ameliorate the conditions governing the Payara licence in comparison to those for the Liza-1 and Liza-2 wells, there were only marginal improvements and it was pellucid that the government is marching to Exxon’s drum beat as it relates to the quickest extraction of oil from the ground to capitalise on the window of opportunity before the decline of fossil fuels notwithstanding the increased risk to the climate that this will bring.
This government position in support of Exxon’s strategy was starkly enunciated at the recent Offshore Technology conference in Houston, Texas by Vice President Bharrat Jagdeo. He said: “Because there is this Climate Change imperative to decarbonise, our policy is to get as much oil out of the ground as quickly as possible. It sounds a bit harsh for those who think you should be environmentally sound but that is the reality of it. We have to maximise the benefit from the industry and use those benefits to change our people’s lives… We don’t know how swiftly we’ll get to a decarbonised world but we have to make use of this period when there is still demand to get as much as possible out of the ground and that is why we support the rapid pace of the industry but it must be done safely”.
That type of broad declaratory support for ExxonMobil’s policy emboldens it and others who are salivating at the prospects of cashing in on the oil and gas opportunities here no matter the palpable risks to the environment and the creation of conditions for the resource curse. It explains why the administration shockingly supported the decimation of a large swathe of mangroves on the West Demerara by a new entrant, TriStar in pursuit of a shore base for the petroleum industry leading to the vulgarity of that company now handing money to a local organisation to “support scientific research” on the mangrove forests in the Barima-Mora Passage.
There are numerous other manifestations of the PPP/C government’s unwillingness to sensibly manage the oil and gas sector including the failure to date to establish the Petroleum Commission conceived by the previous administration, failure to establish the Natural Resource Fund which would institute spending controls and salt away savings for future generations and failure to legislate for local content which it had committed to.
On the regulatory front, the PPP/C government dismissed the Head of the Environment Protection Agency, Dr Vincent Adams who had begun for the first time in this country’s post-independence history to strenuously defend against environmental depredations. It is clear that he would not have allowed willy-nilly approvals for major projects such as Payara and had begun instituting fines against ExxonMobil and other operators for transgressions. In an act against the interests of the country, the government sacked Dr Adams with the result that environmental defences are now severely weakened.
Under the tenure of the PPP/C government, a cleaner suffered severe burns while working on an oil industry installation. She was forced to approach the court for relief as she received no help from the Ministry of Labour. Is this the type of support that the hundreds of workers who are now at risk of exploitation and injury in the oil and gas industry can expect?
By not naming members to the Multi-Stakeholders Group of the Guyana Extractive Industries Transparency Initiative is the administration of President Ali rolling back its commitment to openness in the natural resources sector?
The dominance of oil interests continues. The Guyana National Bureau of Standards (GNBS) has now signed a deal with the American Petroleum Institute (API) for the devising of oil and gas safety standards and guidelines. API represents the oil and gas industry in the United States and has a sordid reputation in various areas including on climate change denial and trying to undermine environmental accords. It is unlikely that the GNBS itself came up with this idea. Whoever was behind it, this accord with the API must be rescinded. It is inimical to the country’s interests considering safety and other areas that it will address. A rebalancing is urgently needed in the oil and gas industry in the favour of Guyana and its people and this scandalous arrangement with API is a good place to start.
