Guyana might get a little money now from oil but massive debt waits on the horizon – says Int’l Lawyer

Local politicians are constantly professing that Guyana will receive millions of dollars in revenue from the oil sector for years to come. While it is true that the country stands to get “a little money” now and in the near future, massive debt waits on the horizon says international lawyer and transparency advocate, Melinda Janki.

In an invited comment, Janki recalled that even now, the country owes ExxonMobil approximately US$900M in costs it claimed to have incurred offshore Guyana before it signed the highly criticized Stabroek Block deal in 2016. With ExxonMobil rushing to have five oil vessels in operation by 2026, development and operational costs will soar to billions of US dollars which Guyana will also have to pay, explained the lawyer. She said that this is just a small fraction of the debt that will be hanging around the nation’s neck in the future.

Also of concern to Janki is the deteriorating health of ExxonMobil, and how reliant it will be on Guyana to be its cash engine. In this regard, she reminded that last week, the oil giant said that the impact of the COVID-19 pandemic has forced it to make serious adjustments to its business plans. As part of its restructuring process, ExxonMobil said that it will be placing its advantaged assets in Guyana, high on its list of priorities.

But in order to keep the focus on Guyana, Janki said the company has had to write off US$17-20 billion worth of natural gas assets in other parts of the world. “Obviously, they wrote off the gas because it is worthless. It is a stranded fossil fuel asset. Nobody wants it,” expressed the lawyer.
Another critical development, she said, is the fact that Exxon is cutting 14,000 jobs or about 15 percent of its global work force while adding that the company has been forced to cut capital expenditure for 2020 to US$23 billion from $33 billion.

Taking the foregoing into account, Janki said it is clear to see that this company is in ill health while adding that it does not bode well for Guyana. The lawyer said, “…Guyana might get a little money now but in the long term it will have massive debt.”
Furthermore, when a company is doing as badly as Exxon is right now, Janki posited that a prudent government would take steps to protect its country. The lawyer said, “But this government seems more concerned with protecting Exxon…All you hear from the government is silly talk about development (of gas to shore projects and scaling up of oil projects in the Stabroek block). All you see is the government burdening the Guyanese people with more debt that has to be paid back long after the politicians have disappeared.”

Janki stressed that the company’s financial health needs to be of concern to all Guyanese as the nation could be left hanging from a dangerous precipice. She said it is imperative that one questions what would happen to Guyana if Exxon goes down in the middle of the grand gas to shore plans it is pushing. Janki said these are all pertinent questions and topics, which the nation’s leaders ought to be addressing now.