Every man, woman and child must become oil-minded Part 176
On 27th October 2017, a gentleman who I had never met asked, through a third party, to see me. It was unusual but I thought why not. After exchanging brief pleasantries, he disclosed that the 2016 Petroleum Agreement signed by the APNU-led Coalition included a signature bonus that had never been made public. There had been no announcement, no disclosure to Parliament and no explanation to the people of this country. In Every Man, Woman and Child Must Become Oil-Minded – Part 27 – December 15, 2017, I recorded that the press confirmed the existence of the bonus after a letter surfaced from the Finance Secretary to the Governor of the Bank of Guyana with the caption “Signing Bonus granted by ExxonMobil – Request to open Bank Account.”
The official response was that the signing bonus was a figment of my imagination. A couple months later, vindication came in the form of a letter from the Finance Secretary to the Governor of the Bank of Guyana to place the money in a special account. In Column # 28 of my Oil and Gas column, I referred to the “final, belated and reluctant admission” of the US$18 million signing bonus. Transparency did not produce the truth; exposure did.
That pattern has returned. Column # 175 published on 7th. February of this year addressed a statement made by ExxonMobil’s Chief Executive Officer during a shareholders’ call explicitly suggested that Exxon would benefit from force majeure conditions affecting Guyana’s operations. The column pointed out that invocation of force majeure could extend the duration of the 2016 Stabroek Production Sharing Agreement. There was no explanation, confirmation, clarification, denial, or engagement. Just silence.
We now know why.
Two nights ago, I was heading to dinner with an international attendee to the current Petroleum Conference which was opened on Tuesday by President Ali. I almost lost control of the vehicle when the individual advised – with total certainty – that the Government had granted ExxonMobil a second Force Majeure under the 2016 Agreement. There was also an extensive force majeure period under the 1999 Agreement that at best was only partly justified. Then we had COVID-19 force majeure under the 2016 Agreement and now this latest secretive case. The Agreement provides for an application and meetings to discuss the consequences of the Force Majeure and would not usually be granted by the Government lightly, since strict conditions must apply: Article 24 of the 2016 Agreement, which has six paragraphs.
Force majeure freezes obligations and extends the life of the Agreement, the amazing benefits, including Guyana paying the oil companies’ taxes and issuing certificates to confirm that those taxes were paid by the companies.
Like the APNU, the PPP/C has not announced this important development nor informed the people whose birthright – and that of generations unborn – our natural resources are. It was done secretly. And once again, Guyanese did not learn of it from their own Government. They had to learn it from foreigners.
A material decision affecting this country’s most valuable natural resource has surfaced not because the Government respected the public’s right to know, but because information emerged from outside. It is an insult to Guyanese that foreign shareholders of foreign companies are better informed than they are. Sovereignty may reside in Guyana; its alienation takes place elsewhere.
The 2016 Agreement was signed under the APNU+AFC Coalition. It was criticised immediately for its low royalty, its generous cost oil ceiling, its incredible tax provisions, locked in for six decades, “under a stabilisation clause which I previously described as ‘more explicit and iron clad preventing the government from any unilateral increase of the oil company’s obligations or the diminution of its rights’”
Not unfairly, APNU was accused of haste, poor judgement and much more. It signed what it did not fully understand. The PPP/C cannot plead these in their defence. In opposition, now President Irfaan Ali and former President Bharrat Jagdeo said Guyanese should “weep” over the contract. Mr. Jagdeo accused the Coalition of “selling out” the country, coded language for betrayal of the national interest. The PPP promised review. It promised renegotiation. It promised better contract administration. It campaigned on competence and experience.
Now, it defends, preserves and extends the very same Agreement.
Force majeure is not administrative tidying. It suspends obligations, shields against default and can extend contractual duration. Extending the Agreement beyond 2057 locks Guyana into terms once condemned, effectively until the oil is depleted and nothing remains to renegotiate. That is not correction. It is consolidation.
This Government knew the contract, condemned it, promised to fix it. , and has now extended it beyond 2057 – effectively until the oil is gone and we are left to deal with the consequences. That is no error. It is a deliberate decision to lock the country into terms once described as surrender.
And this is unfolding while President Ali tells an energy conference which opened Tuesday last about Guyana’s role as a global model of sustainable development, high tech infrastructure and economic diversification. Alas, model development is not stage lights and speeches. It will be determined by what the Government does with the Agreement. Allowing Exxon to get everything it wants – incomplete audits, variation of associated gas provisions, and even implied unilateral variation through its Head Office practices – is not governance
These however, pale in relation to the secretive extension of the Agreement while the country is asked to applaud fancy speeches, panel discussions and photo-ops. This is not leadership. It is theatre – and Guyanese are treated with open disregard.