Guyana Left US $55 Billion At The Table On Exxon Deal Says Watchdog Group

ExxonMobil has received the approval of the new government of Guyana for development of the Payara field, much to the angst of many advocates.
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News Americas, NEW YORK, NY, Tues. Feb. 4, 2020: An explosive report by a human rights and the environmental watchdog group claims Guyana left US $55 billion at the table on the Exxon oil deal due to inexperience.

The report, Signed Away, by the group, Global Witness, claims “Exxon’s aggressive negotiations with inexperienced officials led to an exploitative deal that deprives Guyana of billions.”

The group in a report released Monday, claims Exxon’s original license for the Stabroek oil block – off Guyana’s coast – dates back to 1999. But in April 2016, after the company found oil in the block, its executives set out to pressure Guyanese officials to sign a rushed, new contract to renew its oil license – knowing that its existing license was running out.

The group claims that Guyana’s Natural Resources Minister Raphael Trotman visited Exxon’s Texas headquarters in Texas during the negotiations on an all-expense-paid lavish trip, flying first class and eating at the company’s exclusive restaurant.

GW also claims that Trotman may have also suffered from a possible conflict of interest as he has been close political allies with one of Exxon’s Guyanese lawyers,  Nigel Hughes, who has admitted that his firm has represented Exxon since 2009 and that he has worked for the company on other matters.

“Guyana should renegotiate Stabroek to get a better deal and the government must investigate those who approved Exxon’s oil licenses,” said Jonathan Gant, Senior Campaigner at Global Witness. “Our analysis shows that Exxon would likely pay much more in tax if operating in another country. Yet Exxon aggressively pushed a potentially-conflicted official to sign a rushed contract. Guyana should not lose out on this staggering sum – up to US$55 billion. This is money that can save lives and change futures.”

“People in Guyana have told us that this is money that should be used to meet critical development needs – building schools, roads, and fixing Guyana’s crumbling sea defenses,” added Gant. “A full 90% of Guyanese people live along the country’s coast, and estimates put the bill of rebuilding Guyana’s sea wall at US$3 billion.”

Exxon has disputed OpenOil’s findings while Trotman reportedly told Global Witness that getting maximum revenues from Exxon was not the government’s main aim and the country needed Exxon to help protect its borders from Venezuela. 

In a statement to Bloomberg, Exxon said via email: “We have complied with applicable laws at each step of the exploration, appraisal and development stages, anything to the contrary is baseless and without merit.”

Meanwhile, GW says Guyana’s Foreign Minister Carl Greenidge argued that any analysis must focus not only on financial data from international oil deals but on Guyana’s strategic considerations and the risk to Exxon of military conflict in the area.

On another note, GW also claims that other oil deals – the Kaieteur and Canje deals – also raise red flags for corruption as they were initially awarded to companies with limited experience that flipped shares of their licenses to Exxon before doing any real work.

The official who awarded Kaieteur and Canje – former Natural Resources Minister Robert Persaud – issued the licenses just before leaving office in 2015 and has shown an extraordinary degree of ignorance about the ultimate owners of the winning companies, the Global Witness report claims.

The companies who initially obtained Kaieteur and Canje have denied wrongdoing, as have Exxon and Persaud.

Global Witness is calling on the Guyana government to:

1: Renegotiate Exxon’s Stabroek license to get the revenues Guyana needs to build a strong economy following the country’s Green State Development Strategy.

2: Ban all drilling and extraction in areas other than the 15 discoveries Exxon has made to help fight the climate emergency.

3: Investigate the process by which the Stabroek license was negotiated.

4: Investigate officials and companies involved in the Kaieteur and Canje licenses to determine if there were any irregularities in the awarding of those blocks.

The report comes as Guyanese head to the polls on March 2nd to choose a new government and even as both major parties – the APNU-AFC and the PPP/Civic claim they will uphold the contract if either side wins.