By Misión Verdad – Apr 20, 2023
The Ministry of Natural Resources of Guyana announced last week the extension of its deadline to July 15, 2023, for the submission of bids for the licensing of 14 oil blocks, the original deadline for which was scheduled for April 14 with the subsequent awarding of the contracts scheduled for May 31, 2023. This announcement by the Guyanese government continues its illegal policy of bidding with transnational oil companies in Venezuelan territory.
This change in the dynamics of the bidding rounds in Guyana follows a series of declarations made by the vice president of Guyana, Bharrat Jagdeo, suggesting possible changes in fiscal and royalty policies, mainly regarding the US oil multinational ExxonMobil:
- In the second half of 2022, the government of the former British colony reported that it expected to establish new fiscal terms that will not apply to the existing Stabroek Block agreement led by ExxonMobil. Participation in the block will depend on the recently revised Production Sharing Agreement (PSA).
- There is a proposal to define a 10% royalty rate for the new model agreement, as opposed to the short-lived 2% rate granted to ExxonMobil for the Stabroek Block, thus favoring the US company overall.
- The previous agreement gave the Guyanese government a 14.5% share at the start of production, and the new terms would increase that share to 27.5%.
- In February 2023, Vice President Jagdeo remarked to Reuters that the country plans to take back 20% of the giant Stabroek oil block and remarket it by next year.
- Jagdeo explained that the government wants to lessen the control of the ExxonMobil-led consortium that controls the Stabroek block. “We need more competition,” he said; not exactly good news for the ExxonMobil thieves.
Oil exploration and production scenarios in Guyana are changing. For example, the Stabroek block has seen an exploration success rate of 90%; however, more wells are being drilled in more complex, more expensive, and less promising areas, so there is a high probability that exploration success rates will decrease in certain areas of the block. The transnationals are putting pressure on Guyana to expand the scope of exploration and future extraction of crude oil to the west of the Venezuelan maritime belt.
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On the other hand, the government of President Irfaan Ali realized very late that the Guyanese national treasury has only received a minuscule fraction of the exorbitant profits generated by the oil industry, exposing the inexperience of the Guyanese officials while negotiating licenses with the cannibals of ExxonMobil, formerly Standard Oil. The decision to delay the bidding rounds and to revise fiscal terms for increasing royalties is uncomfortable news for ExxonMobil, which in recent years has dedicated itself to selling the dream of economic growth to Guyana while in reality only giving them crumbs, illegally exploiting crude oil in the maritime strip bordering Venezuela.
It is appropriate to point out here that the London-based organization Global Witness reported in 2020 that Guyana was losing $55 billion, showing that ExxonMobil’s oil production contract with Guyana is slanted in favor of the oil transnational. The report also alleged that ExxonMobil used aggressive tactics and threats to pressure inexperienced Guyanese officials into signing the agreement. Of course, within months, ExxonMobil, with support from the Guyanese government, disputed the Global Witness accusation and later, in 2021, Global Witness removed the document from its website.
In a review of that report, Bloomberg pointed out that Guyana receives 52% of the earnings from the oil fields, comprised of royalties and taxes, when it should really be receiving between 65% and 85%.
In addition, the Caribbean Trakker portal explained that the Global Witness report showed evidence of potential conflicts of interest when Guyanese Natural Resources Minister Raphael Trotman visited ExxonMobil’s headquarters in Texas in 2017, precisely while the negotiations were still ongoing. All expenses of that trip were paid by ExxonMobil, including the minister’s first class flight to Texas and his meals at the company’s exclusive restaurant.
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It cannot be a coincidence that in of January this year, ExxonMobil reported record annual earnings of $55.7 billion in 2022, surpassing its previous record of $45.22 billion in 2008 at the height of the crude oil price boom. Only Apple and Microsoft have surpassed ExxonMobil’s 2022 earnings.
Darren Woods, CEO of ExxonMobil, commented on the company’s record earnings: “We’ve continued to strengthen our industry-leading portfolio and increased production from high-return advantaged assets in Guyana and the Permian,” omitting direct mention of the great contribution of Guyana to ExxonMobil’s profits.
Due to the unsatisfactory and imbalanced financial terms and the Guyanese government’s complete handing over of the country’s resources to transnationals, the country of Guyana itself acts as a subsidiary of ExxonMobil. In March 2023, when a high-level delegation of the US House Committee on Ways and Means visited Guyana, the Guyanese president assured them that his country is ready to guarantee the energy security of the United States, in full cooperation with the White House.
At the end of the visit, US Congressman Jason Smith, chairman of the committee, issued a statement in which he stated that the goal of the Biden administration is to “lead the way in developing, extracting, and selling Guyanese oil,” and added that “America must be committed to outcompeting China around the world.”
Translation: Orinoco Tribune
Misión Verdad is a Venezuelan investigative journalism website with a socialist perspective in defense of the Bolivarian Revolution
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