2% royalty can’t solve our jobs problem …come clean on full contract—Jagdeo

Last Updated on Friday, 2 June 2017, 16:19 by Denis Chabrol

Opposition Leader Bharrat Jagdeo (June 2, 2017) today called on Government to make public the contract document with Exxon Mobil in light of the announcement by the Ministry of Natural Resources that Guyana will earn a guaranteed two per cent royalty on gross production from 2020.

Jagdeo was at the time speaking at the Office of the Leader of the Opposition and, in calling for the release of the contract, said the two per cent could very well be seen as an improvement over the one per cent reportedly negotiated by the Peoples Progressive Party Civic back in 1999.

The Opposition leader said the PPP/C is “Just asking for non-partisan approach…we have seen a number of statements by the Minister (of Natural Resources Raphael Trotman), and I have said in the past that I do not want to conduct the nation’s business on this industry in the public domain, I would prefer it would be treated the way we treat our border matter, we have a bi-partisan approach to the industry particularly because of what it means to Guyana in future….He (Trotman) is talking up expectation about massive future wealth.”

Dismissing the government’s preliminary assertions, the Opposition Leader pointed to the fact that a two per cent royalty at US$50 per barrel for oil on the world market would only return some US$36B ($8B).

That, he said, has to be seen against the backdrop of secretive deals being inked locally by the coalition A Partnership for National Unity /Alliance for Change (APNU/AFC) administration and sibgled out a transaction with Demerara Distillers Limited which he insists placed the jeopardy at risk for about $80B.

Not wanting to speculate, the Opposition Leader quipped that oil prices at “US$50 a barrel can’t solve our jobs problem.”

According to Jagdeo, there is a very “real possibility of Guyanese being worse off” come 2020…”…oil could be a blessing or a curse.”

He said the world is replete with examples where governments have misspent their oil fortunes while ignoring its other sectors—as is the case in Guyana currently.

Jagdeo used the opportunity to again lament what he called the politicizing of any returns on the national patronage.
“What he (Trotman) does, he goes around talking up the future of this industry as though it will solve every problem in Guyana…As though there will be massive flows.”

The opposition leader used the occasion to remind that Exxon Mobil has projected that by 2020 when it begins production it would have already invested some US$5B and this money will have to be recovered by the oil developer and its partners before any profits can be shared.

The former president speaking to the volatility of the oil market and its prices said come 2020 Guyana could very well not be receiving any profits whatsoever but instead will only get the $8B—not a massive amount when juxtaposed to the adumbrations of government officials.

Government, through the Ministry of Natural Resources, Thursday announced that it is preparing to issue a Production Licence to Exxon Mobil—one of the requirements before the developers make their Final Investment Decision (FID) for the project in June 2017.
The Production Licence, according to a Ministry statement “to move ahead in 2020; whilst placing emphasis on Guyanese employment and training, the procurement of goods and services in Guyana, infrastructural soundness and the protection of the environment.”

According to the Natural Resources Ministry, “The Government and people of the Cooperative Republic of Guyana will receive a royalty of 2 percent on gross earnings and benefit from 50 percent of the profits from the sale of petroleum once production commences.”

Government, in its statement, said too “following consideration by the Cabinet the findings of the various reports will be released.”

The Opposition Leader, used the occasion to reject claims by the administration that he is in possession of a copy of the original contract with Exxon Mobil.