Exxon the American oil giant recently reported their 13th oil discovery in Guyana’s Stabroek block. The confirmed barrels of oil in the Stabroek block is 5.5 billion barrels. UK’s Tullow estimates that the Orinduik block holds 4 billion barrels of oil. There are more blocks like Canje and Kaieteur yet to be explored. Even if no more oil is found, the revenue from the current estimates places Guyana among the top countries in oil revenue per person. But how much of this oil revenue will benefit the Guyanese people?
There are many stories about gold being looted from Guyana. From planes secretly shipping gold out of the country to ships with Guyanese gold being smuggled out to other countries (Curacao). This is theft of the people’s wealth and the resource curse in action. But the stakes with respect to oil are magnitudes greater than with gold. If we use the current estimates, we have 9.5 billion barrels estimated worth of oil. With current oil prices hovering around US$64 that would put the current worth of oil at approximately US$600 billion. That is close to a US million dollars worth of oil for each local Guyanese.
The oil contracts are atrocious. An IMF report points out many flaws in the contracts. An OpenOil report shows Guyana’s take from oil at the bottom of heap when compared to other countries. Even current and former prime ministers of Trinidad & Tobago have pointed out the contract should be renegotiated. Many others have called for a re-negotiation, including the former adviser on petroleum to President Granger. We are continuing the resource curse by not taking advice from others who have our interest at heart.
About 30% of Guyanese live on US$2 a day. Even a 1% improvement in the oil contracts would mean these Guyanese would have a 30 times improvement in their living incomes for a whole year. Instead of living on US$730 for a year they would have US$25,000 to live on. That is more than the 6 times the average income for a Guyanese!
Companies report to their shareholders and their goal is to make as much profit as possible. The major shareholders of these oil companies are not Guyanese. Hence, our people do not benefit from these lopsided contracts. Contracts are renegotiated all the time. The US recently re-negotiated the NAFTA trade agreement when it was not to its benefit. It is only the oil companies and their agents in Guyana that promote the sanctity of contracts when it is lopsided in their favour.
Dr Jan Mangal and others were vocal on cost related to the Liza Phase-1. He had criticized the Ministry of Natural Resources for its failure to review the Liza Phase-1 project and cited the US$4.4 billion cost could be reduced by 20%. Shortly after, the cost for Liza Phase-1 was reduced by US$700 million by ExxonMobil. Chris Ram’s body of work dissecting the oil contracts is a masterpiece. Dr Tarron Khemraj has written numerous articles in his Stabroek newspaper column on the resource curse with respect to Guyana’s oil discovery. They need your help to break Guyana’s resource curse.
We are hosting an oil event at 128-04 Liberty Ave, Queens, New York 11419 (Liberty Avenue & 128 Street) on June 1st from 3pm to 5pm. Dr Mangal, Chris Ram, and Dr Khemraj will talk about the opportunities for the diaspora. What is a good deal for Guyana. How you can help break the resource curse. Please confirm your attendance by sending a email to fair_deal_for_guyana@hotmail.com.
