…Ramjattan sees big benefits to Guyanese, higher standard of living

By Svetlana Marshall
A PARTNERSHIP for National Unity + Alliance For Change (APNU+AFC) Prime Ministerial Candidate and Minister of Public Security, Khemraj Ramjattan, said the aged-old border controversy between Guyana and Venezuela, the ailing Sugar Industry and the increasing use of renewable energy, were among factors that influenced the 2016 Petroleum Agreement with U.S oil giant ExxonMobil.

Minister Ramjattan opened up about the 2016 Petroleum Agreement, which has come in for much criticism, during his appearance on Guyana Chronicle’s online programme – Vantage Point – on Wednesday. Criticisms by individuals and organisations such as Global Witness that Guyana stands to lose an entitled $55B as a result of the 2016 Petroleum Agreement lack merit, Minister Ramjattan told this newspaper.

In its report–‘Signed Away,’ Global Witness, an international investigative company, alleged that Guyana will lose $55B due to what it considered as a bad oil deal with ExxonMobil. According to Global Witness, Guyana presented “feeble negotiation terms” and ExxonMobil, being an aggressive company, exploited the country.

But Minister Ramjattan discredited the report as nothing but a propaganda piece. “I have gone through this document called ‘Signed Away’ by Global Witness, and I must say…that was a pathetic piece of propaganda that came at a time, midway into a campaign to make us look bad,” he said.

The Public Security Minister, in rejecting the report, said one must understand the geopolitical climate that existed at the time of negotiation and the signing of the contract. He said the agreement was signed at a time when Venezuela aggression towards Guyana was increasing.

Records show that since Venezuela laid claims that the 1899 Arbitral Award was null and void, there were a number of incidents involving military force, coercion and bullying by the Spanish-speaking country against Guyana. Military force and the threat of force included Ankoko Island, Cuyuni occupation (1966); the Sponsored Rupununi uprising 1969; the Leoni Decree – the attempt to seize territorial sea (1968); assault on Eteringbang outpost 1970 & innumerable subsequent military acts; the military seizure of Technics Perdana — seismic survey vessel of Anadarko in 2013; and most recently, the attempted boarding of seismic vessel Ramform Tethys (December 22, 2018).

“The minute we announced that we got the oil, Mr. Maduro from Venezuela gone and draw a boundary that says all that oil belongs to him. That security, that geopolitical concern of ours was very important, in my mind as security minister too,” the APNU+AFC Prime Ministerial Candidate, reasoned.

He posited that while critics of the government have condemned the agreement, it must be recalled that the original agreement with ExxonMobil was signed in 1999 with a one per cent royalty. He said it was the APNU+AFC Government that had pushed to have the royalty increase to two per cent to complement the 50 per cent profit.

“The thing measured up international best practices – two per cent royalty, plus 50 percent profit share, and we were going to have a company, which was American and nobody will touch American Assets out there like they did with Anadarko,” he said.

UK-based global law firm, Clyde & Co, in a recent report, had made similar observations, explaining that the signing was influenced, in part, by the government’s intent of maintaining a strategic relationship with ExxonMobil and its partners as the country’s territorial integrity was being threatened by neighbouring Venezuela.

In its report, Clyde & Co explained that the government’s and the ministry’s desire was to see the contractor consortium complete their exploration activities so that the full extent of the then-evident resources could be identified and that EEPGL and CNOOC would continue to act as “a deterrent to Venezuela and as a check against the ambitions of Venezuela’s government.”

Contrary to the predictions made by Global Witness, widely respected oil and gas analytical firm, Rystad Energy, said Guyana stands to gain significantly from the contract.

“In the current fiscal regime, the government collects its share through a two per cent royalty and a 50 per cent profit oil levy. Rystad Energy estimates that this will give the government 60 per cent of the profit from the various projects (government take). The average government take of 60 per cent in Guyana is indeed favourable when compared to other large offshore producers. For countries that only recently opened up for [exploration and production] activities – such as the Falkland Islands, Israel, Mozambique and Mauritania – the government take is in the range of 50 per cent to 65 per cent,” the firm explained.

Minister Ramjattan noted that apart from the 50 per cent profit oil and two per cent royalty, the government will also receive withholding taxes. It has received a US$18,000,000 signing bonus, and already over 1,900 persons are directly employed in oil and gas sector to date. Reports coming over the Department of Energy indicate that there has been over US$300M in foreign direct investment to date and over 700 service providers to date.

He said despite challenges, Guyana has moved from exploration to production within a period of five years, and Guyanese must be appreciative of this remarkable achievement. According to Rystad Energy, based on a variety of oil price scenarios, including US$90, $70, and $50 per barrel, reported that Guyana estimated total revenue over the next two to three decades ranged from $51 to US$160B. These estimates were not based only on Liza Phase One, but also the planned Liza Phase Two. With the revenues, Minister Ramjattan said Guyanese can expect higher standard of living and improvements across all sectors.