…Prof Thomas says

WITHOUT United States oil giant ExxonMobil, Guyana stood no chance of holding off Venezuela from taking charge of the country’s new found natural resource.

This view was put forward by renowned Guyanese economist Professor Clive Thomas on Sunday during a panel discussion centred on “The Coming Oil and Gas Economy: Prospects for Empowering the Poor and Revitalising the Village Economy.”

The forum was held at the Friendship Primary School and Professor Thomas was one of three panellists. The other two were attorney Nigel Hughes and Project Officer, Ministry of Natural Resources, Mariscia Charles. “In the national debate, it is significant that the participants seem to ignore the situation that we find ourselves in. I wish if Guyanese could develop the oil industry themselves, but they can’t, because we don’t have the skills or know it all.

“The fact that the United States and China control the industry is to my mind an absolute god-send, because if this were not the case Venezuela would have already invaded this country and taken over the oil industry,” Professor Thomas stated.

“In a real sense, we have to be realistic – we need EXXON more than Exxon needs us – if they are not here we would not have had the oil. The simple fact is that Venezuela is so desperate that if we do not recognise the strategic need to keep them [ExxonMobil] as partners we would be putting our heads in the sand like an ostrich,” he added.

Professor Thomas said he has observed the naysayers who have been repeatedly peddling negative forecasts of Guyana’s new found wealth and made it clear that while there are risks, there was a great need for Guyana to go the route it did. He pointed to the opinion that Guyana is not getting a fair share out of the contract it has with ExxonMobil.

“That reality therefore governs everything. People say in the contract, we are not going to get enough money out of the oil and I am sure the contract can be a better contract, every contract can be. I have written about incomplete contracts…no contract is ever perfect.
It is something that has been going on since the 1990s, so we know that the contracts are not going to be complete now, but what we have to recognise now based on the contract that we have is that every professional estimate, estimates that Guyana will get more than half of the net cash flow from the sales of this oil.

To get 50 per cent of the take – everybody would like to have a 100 per cent, but we can’t get that and also have Exxon and as I told you Exxon is here to prevent us from losing out to Venezuela,” said the economist. Guyana and Venezuela have an age-old border controversy and earlier this year, United Nations Secretary-General Antonio Gutteres referred the Guyana/Venezuela controversy to the ICJ. He determined that the Good Offices Process had failed to achieve a peaceful settlement of the controversy.

Venezuela is claiming that the 1899 Arbitral Tribunal Award, which had given more than 90 per cent of an area to then British Guiana (now Guyana), is null and void. Approximately 118 years after that award was issued, Guyana remains resolute in its position that a juridical course of action is the only means through which this matter can be permanently resolved. In its application, Guyana requests the court “to confirm the legal validity and binding effect of the award regarding the Boundary between the Colony of British Guiana and the United States of Venezuela, of 3 October 1899 (hereinafter the ‘1899 Award’)”.
Meanwhile, Professor Thomas said in such an industry and with such aggression displayed by Venezuela, and the estimate of earning US$10B annually, “You have to take the risk”. He said too that in such circumstances, consideration must be given to the investor.

“We need them now; we are not in a position where we are capable of keeping the industry alive without inducements in the face of significant threats from Venezuela,” said Professor Thomas, who has written extensively on the oil and gas industry. He reminded that Venezuela’s resources clearly outnumber Guyana’s. “It is in that context that I want us to recognise that whatever problems we have, we have to navigate them – based on those strategic realities,” he said, quickly pointing out that several problems have to be navigated.

Professor Thomas expressed disappointment with the level of negativity which is being peddled via the media. He told participants at the forum organised by the Buxton First of August Movement that there is no “empirical evidence” which exists to show Guyana will fail. “People are speculating that this can happen. Theoretically, all the negatives can happen because it is all a possibility,” noting that a positive outlook is always better than a negative one.

Gap analysis
Meanwhile, Attorney Nigel Hughes in his presentation said there is need for a gap analysis for the public and private sectors. According to Hughes, an analysis and identification of opportunities for local companies to participate in value chains related to the new oil-and-gas discoveries, including downstream opportunities and indirect economic opportunities.
“We need a short, medium and long-term plan on what we are going to do with the industry and this essentially is what the gap analysis should do,” said Hughes.

He recommended that stakeholders be identified from both the public and private sectors to lead initiatives in this regard and this must include academia and technical institutions. Access requirements for participation of the local businesses in the provision of goods and services to the industry and the identification of short-term items to be implemented with the highest impact must all be considered.

Hughes made it clear that the real development will take place from the revenue from oil and gas, but was quick to note that empowerment of the poor is unlikely under the current constitutional construct. “We need to have a national vision that is articulated, so that every Guyanese knows about it; we may disagree, but at least you know about it, what the plan is and where we are going. In that national priority plan, we have to decide what we are going to do first, what infrastructural projects, educational projects, health, where are we going to spend our money first? And what is the plan over the next 10 years?”
The attorney told attendees that there is no relationship between the poor and the existing decision- making apparatus, except in the form of national elections. On the issue of revitalising village economies, Hughes said, “People will revitalise those villages which they think are voter-rich and that is not a sustainable process. We need a national process and therefore the local government representatives at the village level need to have a greater say in what happens at the national economy.”

As such, he stressed the need for the creation of a framework for the equitable and sustained development of the country.

Empowering citizens
Meanwhile, Charles told the attendees that when it comes to empowering the poor, the government has a bottom-up approach. She said it is government’s aim to empower poor people, so that they are able to transform their own lives. As such, she pointed to revitalising the village economy. “We want to see a resurgence of the village movement. The village movement is built on agriculture, which forms its backbone and contributed largely to its economic development. The village propelled the infrastructural development of rural areas by the construction of homes, churches, cemeteries, schools, bridges and roads,” said the Ministry of Natural Resources’ Project Officer.

She noted that the resurgence of the village movement is a partnership between the government and citizens, while adding that the government will support and sustain micro-enterprise development as much as it must to maintain macro-economic stability. “The villages must work together towards self – sustenance through the establishment of micro and medium-scale enterprises to generate industries and businesses, which will provide employment by growing food again, producing goods again and providing services again.”
Charles said too that the village economy can combat the Resource Curse or Dutch Disease by focusing on the development of other sectors such as agriculture.