Guyana will become the scrap map of the oil industry
Kaieteur News – Guyana doesn’t get anything for free from the oil companies. Guyana pays for the assets, which are used by these companies in their petroleum operations.
At the end of the deal, Exxon, CNOOC Nexen and Hess – signatories to the agreement – will hand over to the Minister all the equipment that the country has paid for in full cost recovery. For those equipment for which the full cost is not recovered, Guyana has to pay the undisclosed cost of the equipment.
Therefore, Guyana owns the assets, which are acquired, on its behalf by the oil companies. These companies should be paying Guyana for using these assets. However, this is not because our visionary leaders did not see the need to discuss for a voice in expenses incurred by the oil companies.
The Production Sharing Agreement, signed between the Government of Guyana and Guyana’s Esso Exploration and Production Limited. CNOOC Nexen Petroleum Guyana Limited and Hess Guyana Exploration Limited, allow the oil companies to use what is acquired for their petroleum operations free of charge. The agreement goes so far as to say that these companies will have free use of any equipment, which they had used in a surrendered area and would like to use it now in the remaining part of ‘ r concession.
In addition, while we repay for the assets, which are used by the oil companies, they do not pay Guyana a fee, rent or lease for their use. They have free use of everything, which is paid for by us.
At the end of production, we still have to pay them for anything that the full cost has not been recovered. That’s the equivalent of having to pay someone to live in your home.
To add insult to injury, the agreement allows the oil companies to use the assets for free by virtue of signing some other petroleum agreement after the current one expires. That is, they will have free use of oil exploration and production under another agreement.
These jagged arrangements have been moved down our necks. Exxon acquires whatever assets it wants. Guyana has no voice whatsoever in deciding what is procured, by whom and by what price it is procured, though the country will have to repay every blind cent spent on petroleum production.
The oil companies house their workers in international hotels. Some of them bring their pets. Guyana fetches the Bill. These types of expenditure do not require Ministerial consent. So company employees can live in luxury, knowing that Guyana picks up the tab and has no say in where they stay in Guyana, how much they eat and what they eat drinking.
The Audit report is not to criticize management decisions of this nature. The audit is therefore not a defense to Exxon from acquiring extremely expensive assets or providing luxury services and accommodation for its staff.
Our leaders have tried all sorts of excuses to justify these unsustainable provisions. One went so far as to say that the country’s total banking assets were not sufficient for the type of investments, which are made by the oil companies. What he did not say is that these investments are recoverable and therefore we have no obligations to the oil companies.
Another leader had said that the oil companies were taking a big risk because if they didn’t find oil, they would have lost their exploration costs before discovery. But that leader did not indicate that when oil was discovered, the entire basin was de-risked and, therefore, that this should have been the basis for a proper renegotiation of a contract before issuing a petroleum exploration license.
When all surveying, drilling and pumping is complete, oil companies will dump all assets for which full recovery has been paid. They will dump it in Guyana because the contract provides that they must submit it to the Minister of Natural Resources.
So Guyana will become the scrap map of the oil companies. It will have to accept all those pipelines and other equipment, which the oil companies would have used to use … and which Guyana is paying for.
That scrap has no resale value. Just like the natural gas, which Exxon wants to charge us for transporting it ashore!
(The views expressed in this article are those of the author and do not necessarily reflect the views of this newspaper.)