–before making misleading statements about emerging oil, gas sector

U.S. Ambassador to Guyana, Mr Perry Holloway, is urging Guyanese to become “oil smart” before making inaccurate statements about the emerging oil and gas sector here.
During a recent interview with the Guyana Chronicle, the U.S. envoy said he has observed a number of articles over the past few months which presented much misinformation on the sector and the benefits to be accrued.
The Guyana Government in June this year announced that Guyana stands to benefit from a two-per-cent royalty when oil production begins in 2020.
In fact, the coalition government said Guyanese will enjoy significant benefits from its oil resources, as it has negotiated a 200 per cent increase on the initial agreement with U.S. oil giant, ExxonMobil.
The oil company had entered into an agreement with the former People’s Progressive Party (PPP) administration in 1999. That agreement has since been renegotiated to ensure that Guyana and Guyanese derive sufficient benefits from the emerging oil and gas sector, the government said in a statement in June.
The government has given its word that it will continue to ensure that Guyanese and the country benefit from the emerging oil and gas sector, and that assurance followed statements made by the PPP to the effect that Guyanese have nothing to gain.
“The royalties and profit-sharing revenue are comparable with the world standard, and will redound to the benefit of all Guyanese,” the government said in its statement.
“In fact, the coalition government confirms that the 2% royalties represent a 200% increase on what the former PPP government had negotiated while it was in office before demitting in 2015,” it added.
At the time of issuing the statement, the government had said that the 2 per cent royalty will give Guyana some $7B in annual revenues on top of the 50 per cent share of profits.

NEED FOR CONVERSATION
But Ambassador Holloway made it clear that there needs to be conversation on the industry, and stressed that talks must bring to the fore accurate information and not speculation.
“There is no scenario where the country could get nothing, because you are going to get 2 per cent of what comes out those wells, no matter what,” he declared.
“I see articles which state that Guyana could get nothing. First of all, not true! At a minimum, there is a 2 per cent royalty right off the top. So if the price of oil is $10 a barrel, Guyana still gets 2 per cent and Exxon Mobil gets nothing.
“There is a scenario where Guyana gets 2 per cent right off the top and Exxon Mobil could get nothing if the price of oil is so low. No one really thinks the price of oil is going to be that low,” he went on to explain.
The Ambassador was keen to note that he does not believe that the many commentators and analysts have set out to deliberately mislead the nation.
“There are a lot of articles and lots of comments out there that I am not sure where people are getting their facts or their knowledge,” he stressed.
“Sometimes I see analysis, and their math is wrong; basic math or their understanding of the Public Service Announcement. Most of the analyses do not reflect what the real truth is and the real math is.”
The U.S. envoy is urging that all stakeholders, including the average Guyanese, become educated about the oil industry and the benefits that will accrue therefrom.
“Oil is going to be a giant part of Guyana; that is transformational… One of the things I am glad about is that everyone is trying to get oil-smart. That is a very good thing,” he told the Guyana Chronicle.
He noted that ExxonMobil, which is a publicly traded company, has shareholders’ meetings during which they’ve spoken about their projected revenues and profits, and urged that persons do thorough research before making public comments on the matter.

NEW TO GUYANA
The diplomat sought to remind the public that oil and gas is a new industry to Guyana, and it would be best if only accurate information is placed in the public domain.
“I am just saying a lot of what I am reading is not true. I don’t think it is not true on purpose; no one is lying,| Ambassador Holloway said, adding:
“I just don’t think they understand or know how to do the analyses. Believe me, U.S. companies have to tell the truth to their shareholders.
“I believe if we talk about it, we should talk about it based on facts.”
Asked specifically about the role the U.S. has played in assisting Guyana in preparing for the oil and gas sector, the ambassador said his country, through the embassy in Georgetown, has played, and will continue to play, a supporting role to the Government of Guyana, once asked.
He said the embassy has assisted the government in several areas, particularly in terms of technical assistance and training. Additionally, the U.S. has provided much assistance on Guyana’s application for membership to the Extractive Industries Transparency Initiative (EITI).
The EITI is a global standard for the good governance of oil, gas and mineral resources. The application was presented to Dr. Francisco Paris, Regional Director of EITI, via Skype, in a simple but significant ceremony in the ministry’s boardroom, Brickdam, earlier this year.
“The EITI process is the underlying or undergirding principle in resources of a state which belongs to the people, and therefore the incomes earned must be accounted for and spent in accordance with both the people’s wishes,” Minister of Natural Resources Raphael Trotman had said at the time the application was made.
Being a member of this organisation will ensure that management of the extractive sectors “is done in a manner that is transparent.”
Ambassador Holloway said the U.S. Embassy, through the Carter Center, worked with Guyana to get its application in to become a member of EITI. “I am proud to say, the Guyanese did a lot of hard work; got their application in. I am saying that I hope, as I can’t say for certain because that decision is made in Norway by a committee, but all signals are good, and I think before the end of the year, Guyana’s candidacy will likely be accepted; fingers crossed.”
LOTS MORE TRANSPARENCY

He told the Guyana Chronicle that when Guyana’s candidacy is accepted, it will ensure lots more transparency within the extractive industry, and that is not limited to oil and gas but to gold and bauxite as well.
“But once that happens, it is a lot of work, not only for the government but for the industry as well,” said the envoy.
But notwithstanding the assistance provided thus far, the Ambassador believes more can be done on the part of the U.S. government.
“We have not written any laws or regulations…we have provided the government with model laws and regulations they might [want to] consider, [provided] technical advice on things we have been asked to comment on. We are a country that has a very developed oil industry; we have lots of experience all over the world. We do try to help when asked but our help is not as much as I would like it to be,” he stated.
Meanwhile, as it relates to the Sovereign Wealth Fund (SWF), Ambassador Holloway hopes that it would be transparent and done in a way that all citizens, present and future will benefit.
“Everyone wants a Sovereign Wealth Fund that indeed does protect Guyana’s wealth for future generations,” he declared.
Earlier this year, Minister of State Joseph Harmon had cautioned that the establishment of the SWF requires careful analysis to ensure its application meets local conditions.
“This administration, we are taking our time. We’re trying to get things right, because we believe in the interest of the people of this country we have to establish these funds, we have to establish all of these processes in a sound way that can stand scrutiny for years to come,” Minister Harmon had said back in July.
Guyana has received assistance from several international agencies and countries in relation to the oil and gas industry. In fact, the SWF has benefited from inputs from Chatham House.