“Hit-and-run capitalism” targets Guyana’s oil and gas


PHOTO/Eco Atlantic

The discovery of oil off the coastal waters of Guyana occasioned widespread speculation the small South American nation was in for a boom that could fund development efforts. However, that optimism may need to be tempered if details of the deal between the Georgetown government and the oil giants are any indication of things to come.

That was the message from Amanda Latimer, a campaigner against a 2016 energy deal between the government and a multinational consortium headed by ExxonMobil.  The Canadian campaigner, a lecturer in political economy at Britain’s Kingston University, was speaking at the Pan Afrikan Society Community Forum (PASCF) in Brixton, south London.

This former British colony is located on the north-eastern coast of South America.  It is bordered on the west by Venezuela, and on the east and south by Suriname and Brazil respectively.  It is also known as the “Land of Six Peoples”, a tribute to its diverse mix of peoples and cultures, including Amerindian, African, Indian, Chinese, Portuguese, and people of mixed heritage.  It is also one of the poorest countries in the region, with an average per capita income of US$4,000.

That is why the screaming headlines about a fast-approaching “oil boom” are enough to make the average Guyanese bristle with anticipation.  Take your pick: “Exxon Puts Guyana On The Map”, “Is Guyana Prepared For An Oil Boom?”, “Oil discoveries likely to bring rapid changes to Guyana” and, last but not least, “Growing Guyana: The Boom of Offshore Energy”.

Full scale commercial production is set to begin next year in the Liza oil field, the first of 12 such sites that have been discovered and the first to go into development.  It is located in a petroleum-rich, 6.6 acre offshore block known as the Stabroek oil fields.  Liza is expected to yield an average of 120,000 barrels per day (bpd) by 2020.  By 2025, when sources say five sites are expected to be online, it is estimated that total production will peak at 750,000 bpd.

By the time production commences, it would be two decades after Guyana signed an exploration agreement with ExxonMobil, and five years since the initial discovery of oil in 2015.  Exxon’s junior partners in the production consortium are the United States-based Hess Corporation and Nexen Petroleum, a subsidiary of the China National Offshore Oil Corporation. 

Super-profits for oil giants, peanuts for the people

Experts say there may be up to four billion barrels of recoverable oil under Stabroek, with revenues from the combined oil and gas deposits put as high as US$200 billion. Compared to the vast amounts major oil producers like Saudi Arabia or Russia take in oil revenues, those figures may sound modest, but they represent a tidy windfall for a poor country with a population of fewer than one million. 

The question on the lips of many is whether Guyana will actually cash in on this predicted bonanza.  For imperialist organs such as the New York Times, it will – but only if Guyanese leave behind their “long history of corruption, ethnic rivalry, weak institutions and a lack of innovation”.  This is an embellished reference to cases of corruption and racial tension in this multi-ethnic nation.

However, according to many critics, the primary reason Guyanese will lose out on the deal is that its proceeds will be siphoned off by Exxon and its partners, via problematic financial transactions and profit write-offs that the multinational corporations have negotiated with the neo-colonial government in Georgetown.

As Andy Higginbottom, also a politics lecturer from Kingston University, said in his contribution, “The thing is that it’s perfectly legal – it’s part of the contract the government signed with Exxon, and is a typical example of a production sharing agreement”. 

Latimer added: “The development of the Stabroek oil field will see dramatic super-profits go mostly to corporations, while the Guyanese people are the bearers of the actual risk”.

A shameless, exploitative agreement

Exxon say they laid out an initial US$500 million, plus a further US$4.4 billion to develop the Liza oilfield. But many critics charge that these high costs are indefensible, given that oil prices are currently at historically depressed levels.  They submit that the Exxon-led consortium is piling up unnecessary costs, which will then be inflated through the devices of “creative accounting”, and then “written-off” against revenues that should rightly go to the Guyanese people.  

This is what Latimer said in relation to that issue: “The development takes place at a moment of low oil prices and the bill for the exploration and developmental costs are being loaded on the Guyanese state and people”. 

“This ExxonMobil agreement with Guyana shamelessly breaks new ground”, added Brother Cecil Gutzmore of the PASCF, who chaired the event.

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