Get ‘oil smart’

U.S. Ambassador Perry Holloway

… US Ambassador urges Guyanese not to be sidetracked by so-called oil experts

UNITED States Ambassador to Guyana, Perry Holloway, is urging Guyanese to equip themselves with the facts on the oil and gas sector, and more so the Petroleum Agreement signed between the Government of Guyana and ExxonMobil’s subsidiary Esso Exploration and Production Guyana Limited (EEPGL) and its partners.

Critics of the deal have complained bitterly about the contract and have questioned the benefits to be derived from the industry under this current construct but the US Ambassador said Guyana’s earnings per day when it starts producing oil, come 2020, is no myth or fake news.

In an exclusive interview on the Jumpstart Show on 94.1FM Thursday morning, Ambassador Holloway told News Source Editor-in-Chief Gordon Moseley that there is information on the budding Oil and Gas Sector then there is misinformation on the sector that is being peddled in news; as such it is important for Guyanese to get “oil smart” and become knowledgeable by conducting personal research.

“Oil is a very complicated industry, there is a lot to know, a lot to learn. I encourage everyone, experts or not, to continue to learn … a lot of stuff is available online including the contracts, so I encourage people not just to take anyone, myself included at their word but to go out and investigate it and find out the truth,” the US Ambassador told listeners tuned in to 94.1FM.

He noted that since the coming of oil, there has been a plethora of news articles aimed at comparing Guyana with other oil-producing nations that have fallen on difficult times. “Cherry picking of data, whether it’s to sell newspapers or for political means, I guess that’s what you do to sell newspapers or advance political agendas. But I’ll just encourage everyone to go out and get the whole story,” he urged.

The Petroleum Agreement was originally signed in 1999 between ExxonMobil and the People’s Progressive Party (PPP) Government but was slightly adjusted after the A Partnership for National Unity + Alliance for Change (APNU+AFC) Government took office. Under the revised agreement, Guyana will receive 50 per cent of the oil profits and two per cent royalty.

Analysing the agreement, Ambassador Holloway said the Government in 1999 signed the contract with ExxonMobil in “very good faith,” noting that it was a “good deal.” The renegotiated contract is also pleasing; he further posited, adding that the country’s GDP is likely to triple when oil production starts.

“2020 is first oil production (with) 100,000 barrels per day – that is not a myth. That is not fake news. It is true, it is going to happen. Probably within four or five years after that, Guyana will be doing 500,000 barrels (of oil) per day…and when Guyana does 500,000 barrels per day, even at very low oil prices…the money that Guyana will get will be in the neighbourhood of $10B. Guyana’s current annual GDP is about $3.5B – so almost a tripling of revenues coming in,” Ambassador Holloway explained.

He noted that what a country does with its oil revenues is entirely up to the Government and the people. “So if the Government is corrupt then you could imagine the results you would get. So while everyone should hold Exxon’s feet to the fire, everyone is going to have to, in the future hold whatever Government is in power, (their) feet to the fire.
“What happens to the money they get from oil revenues should be determined by the government and people, it is not determined by the company providing the money,” Ambassador Holloway further explained.

He expressed the hope that when the revenues begin to roll in, the Government in consultation with the people would invest heavily in infrastructure, education, health, security and agriculture in addition to other sectors.

Ambassador Holloway noted that jobs will be created when the oil revenues trickle down to other sectors and industries. “The real job creation from petroleum is not going to be the millions of jobs created from petroleum because it will not create millions of job…. It would probably create thousands if not tens of thousands…the oil is offshore and would likely be refined somewhere else,” he said, adding that “real job creation” will occur in areas where Government pumps financial resources.

In an Op-ED earlier this month, the US Ambassador had underscored the importance of having a Sovereign Wealth Fund, stating that ‘it will not be enough simply to have a ‘rainy day fund’ or even an investment fund but to institute a revenue and investment framework that protects and effectively leverages wealth to transform the nation.”

As the development of a long-term vision for a green, sustainable economy continues, Ambassador Holloway said it was hoped that conversations continue to prioritise the implementation of a strong, comprehensive sovereign wealth fund bill, in the broadest sense, that is transparent, independent, inviolable, and non-partisan.

His statements, however, were met with objections by the Finance Ministry. According to the Ministry, the Op-ED sought to create the impression that the Government and by extension the Finance Ministry has not made significant progress on the Sovereign Wealth Fund Bill.

However, the US Ambassador clarified on Thursday that his Op-ED published in local newspaper on March 13, 2018 was intended to educate readers, stating too that he had given recognition to the Government for the significant progress made thus far. The foundation for the establishment of the Sovereign Wealth Fund began in 2016. The draft Sovereign Wealth Fund legislation was compiled by the Ministry of Finance with support from the Commonwealth Secretariat.

A green paper on the subject will be published in 2018 and consultations will occur subsequently. The legislation is intended to be laid in Parliament by the end of 2018.