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OPINION: ExxonMobil will not amend contract other than in its own time and on its own terms

by GHK Lall

On this one thing all Guyanese can agree: the oil contract(s) is poor, measly, and impoverishing. I think so, and anything above the pittance finalized would be welcomed. But this is as far as I will go today on the demerits, or otherwise, of the contract(s). Instead, I focus on and share what I hope would be helpful.

For certainty, there will be foreign experts and prestigious law firms ready to run to the rescue of Guyana. I can name Sullivan & Cromwell, Skadden Arps, White and Case, and Baker Potts, among the leaders of the pack who salivate at the prospect of representing Guyana and its issues with ExxonMobil et al. before the world. Disadvantaged Guyana, remorseful (buyer’s) Guyana, and injured Guyana. They will respond with strong assurances of the likelihood of their prevailing at the bar.

I beg to differ as I see things otherwise. First, the terms of the contract are as ironclad and final as they are unambiguous and unchallengeable. The matters of equity, fairness, and what was negotiated and agreed to in the next nation or the other, are all moot. They are irrelevant and inconsequential to the peculiar circumstances of Guyana. Try as I may, and as much as I would love to see and hear differently, I cannot envision that any reputable court with international jurisdiction would be a party to any material amendment of the contract provisions and conditions hammered out and executed between sovereign Guyana and mighty ExxonMobil. I should add sober and sane Guyana, as well as a Guyanese representative body, that was not operating under any duress.

I submit this and stand by this by asking a tiny handful of easy-to-follow questions. If a court, any court, did venture to revise and deliver a judgment thereto that the contract is “unfair” as to any of its terms, then would it, or similar court, be open and willing to deal with the rain of near-identical issues placed before it by other complaining nations? Next, in the event that an international judicial body did touch Guyana’s thornbush, what would be its definition of unfairness? How and what would be its frame of reference for what is so-called fair? And fair according to whom? Guyana or ExxonMobil?

I further submit that the answers to these questions and issues may be approached for some sense of satisfaction by Guyana for Guyanese. We have done something. We have taken the fight to the foe and with the firmest, if not most ferocious, of intents. Still, I urge that there be no quick dismissal of the unique concentration of circumstances that grace (or curse) one nation versus the other. I have persistently called ours peculiar. This is not for the purposes of being contrarian. I stand as realist and pragmatist. It is from the wide lens view of a particular world, and how it operates, with due cognizance of each and every facet that pertains. Sometimes, those may include that which is given short thrift by host, resource-rich, nations. Those are not mere inconveniences to be ignored or minimized; they represent bargaining chips for the investor/producer. The harder, better bargainer usually triumphs. The weaker counterparty has little and too few if any, fallback options, all situations considered.

As an aside, even if by some small miracle Guyana were to succeed in squeezing something more out of its appeal to international tribunals, it may end up hurting itself in the long run. Meaning that: a) it is not a wholesome place to do business; b) it is neither trustworthy nor principled partner; and c) it reneges on arm’s length, good-faith negotiations down the road. Having said this, I fear that Guyana (regardless of who rises to the helm) would be left to deal on the international scene with not just the rapacious, but the unsavory, too. Bottom feeders, there will be many promises, many more disappointing and expensive shortfalls. A Pyrrhic victory, it may prove to be. That has been our history, hasn’t it?

Thus far, I have not said a word about where ExxonMobil would be while this flurry of escalations unfolds, as is now promised publicly. For sure, the giant does not have the sympathy factor in its favor. But it will not be passive. And ExxonMobil is well-equipped to unleash its own armada of attackers to defend the one soil that is more sacred to it than all others. That would be the sacrosanct nature of contracts executed with sovereign nations. That is inviolable. The corporation would be unmoved. Perhaps, the best that can be hoped for is that it volunteers out of sight and without fanfare to step up a shade more aggressively on certain contract terms. But the company will not stand idle and acquiesce to its arm twisted behind (unfairly, from its own selfish perspective), through what is the equivalent of national judicial blackmail.

I repeat what was said elsewhere: if ExxonMobil blinks and bows before pressures that come from Guyana for renegotiation at this point, then it opens itself to similar, if not more intense, pressures from all the other national parties with which it is a contractual partner. That is not only unthinkable, but it is also to be resisted with every sinew at its disposal. And though its history of doing so has been limited to very crucial situations, ExxonMobil will reach above its head all the way to State and the White House to recruit required muscle and game-changing influencers. I do not think that Guyana wants to go there. Nor does it wish to leave itself vulnerable by risking the wrath of its only ally of substance and within proximity.

Now, I close by sharing that I do not like this contract. Even non-Guyanese would have a problem with it. Notwithstanding my own misgivings, I recognize that it is written in stone, and it would be highly unlikely that it could be overturned. By anybody. That is, other than ExxonMobil itself in its own time and on its terms.

Mr. GHK Lall is a Guyanese author, columnist and former financial analyst on Wall Street.