Govt. needs to tell the truth about oil deal pitfalls

Govt. needs to tell the truth about oil deal pitfalls

International lawyer and transparency advocate, Melinda Janki is of the firm conviction that it is high time the government desists from selling the citizenry false dreams and hopes about the oil wealth. Instead, the attorney categorically states that it must inform the citizens of the truth, which is, that the Guyana-ExxonMobil deal is fraught with pitfalls that only funnel billions of dollars in profits into the pockets of ExxonMobil, its partners and their respective shareholders.

Janki was also keen to point out that the government must make every effort to ensure that ExxonMobil and others obey the nation’s rules and regulations, especially those which relate to the protection of the environment. The lawyer expressed these opinions during an interview on Kaieteur Radio’s show, Guyana’s Oil and You. There, she was joined by Tom Sanzillo who serves as Director of Finance at the Institute for Energy Economics and Financial Analysis.

IEEFA Director of Finance, Tom Sanzillo
IEEFA Director of Finance, Tom Sanzillo

Sanzillo, who unequivocally shared Janki’s sentiments, was also keen to note that based on the lopsided structure of the contract, Guyana will not have enough money for new spending, nor will it have sufficient oil revenues to cover budget deficits and make significant transfers to the Natural Resource Fund.
The industry expert also bemoaned a major pitfall of the contract which sees Guyana paying the income taxes of ExxonMobil and its partners. If Guyana did not opt to do this, Sanzillo said Guyana could have been benefitting from an additional US$650M. Instead, it is allowing the oil companies to walk away with this.

Sanzillo noted that he would have made these and other points in his report that was published by the IEEFA. That report is titled, “Guyana’s Oil Deal: Promise of Quick Cash Will Leave Country Shortchanged.” That document he said, also states that it would be better for the government and the companies to disclose on a regular basis, projected production for the Stabroek as well as the outlook for the oil sector so that the public can engage in more informed discussions. He was critical of the fact, that is not taking place.
Sanzillo said, “We at the IEEFA don’t have the authority of the government or the legal obligation of the contractors. We do however, look at the longer term markets and we can say that the outlook is negative for the oil and gas industry and that means that the prices are likely to stay low. It means that the worldwide competition is going to get more tense and that would mean more downward pressure on the prices.”

He added, “It also means, and this may be a shock to everyone, that Exxon, who is the lead on the project, has become a less stable company that we have known it to be. We know of a long history of solid, stable profits and developments. And the company, like the rest of the industry, is getting much weaker.”
Taking these factors into consideration, Sanzillo alluded to how important Guyana is to the oil giant while reiterating the need for all parties, that is to say the government and the oil companies, to be transparent with the citizenry about who really stands to benefit from the lopsided deal Guyana has been handed.

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