ExxonMobil deal deprives Guyana of up to $55 billion according to Global Witness; Exxon disputes allegation
A Global Witness report alleges that ExxonMobil negotiated an exploitative oil deal with the government of Guyana that will cause the country to lose out on up to US$55 billion of revenue, which could have been used to build needed infrastructure and sea defenses to protect the 90% of the population at risk from rising sea levels. The report also alleges that ExxonMobil used aggressive tactics and threats to pressure inexperienced Guyanese officials to sign the deal.
ExxonMobil denies the allegations and says that, "the terms of the contracts in Guyana are competitive with other agreements signed in countries at a similar resource development phase. ExxonMobil is committed to the highest standards of business conduct, and we follow all local laws and regulations wherever we operate."
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Author: Global Witness
With so much oil off its shores, will Guyana benefit from Exxon’s 2016 Stabroek license?... In light of critiques of Stabroek’s fiscal terms, Global Witness has commissioned OpenOil to determine what revenue Guyana will receive if Exxon extracts the oil it has found to date... OpenOil’s analysis concludes that Exxon’s deal is unfairly exploitative. It finds that Guyana will receive up to US$55 billion less than it should from the Stabroek license; an average of US$1.3 billion per year.
... Exxon employed aggressive negotiating tactics. At the same time, Guyana’s Natural Resources Minister Raphael Trotman – who helped negotiate the deal and ultimately signed it – may have been operating under a possible conflict of interest. The evidence suggests that Trotman also failed to represent his country effectively during negotiations, declining to listen to expert advice and under-valuing Guyana’s apparently strong bargaining position.
... Countries like Nigeria and Papua New Guinea have recently called for oil companies to renegotiate the terms of their licenses. Guyana can do the same by negotiating a better Stabroek deal and, given how important the license is to the company’s future, Exxon should come to the table.
ExxonMobil is committed to the highest standards of business conduct, and we follow all local laws and regulations wherever we operate. The terms of the contracts in Guyana are competitive with other agreements signed in countries at a similar resource development phase... It will also generate billions of dollars of revenue, significant economic development and job creation for Guyana that it otherwise would not have received had the oil resources not been developed.
The Global Witness/Open Oil report makes sweeping assumptions about the economics of future developments in Guyana and makes misleading comparisons. At the time the contract was negotiated, Guyana was a frontier area given its stage of exploration and development. It cannot be compared with mature hydrocarbon producing jurisdictions, which have evolved fiscal frameworks that reflect maturity and a lower risk profile. The Co-operative Republic of Guyana issued a statement calling the report sensationalist, agenda- driven and extraordinarily speculative. ExxonMobil has developed a long-term, mutually-beneficial relationship with Co-operative Republic of Guyana that has led to the production of oil resources in the Stabroek Block and the creation of significant value for the people of Guyana.
- Related stories: ExxonMobil deal deprives Guyana of up to $55 billion according to Global Witness; Exxon disputes allegation
- This is a response from the following companies: ExxonMobil
Author: Luc Cohen & Neil Marks, Reuters
A report by a nonprofit watchdog group critical of Exxon Mobil Corp’s oil contract with Guyana has rekindled a debate over whether the deal is too generous to the company, just a month before a crucial presidential election... Global Witness said the U.S. oil major's 40-year deal to produce crude in the offshore Stabroek block would deprive the government of up to $55 billion in revenue over the life of the contract... Global Witness said 52% of oil revenues would flow to state coffers in Guyana, below the 65%-85% range it said International Monetary Fund (IMF) surveys showed was “normal.”
... “The conclusions are misleading in that they compare Guyana deep water with mature hydrocarbon-producing provinces which naturally have evolved fiscal frameworks reflecting maturity and lower risk profiles,” Exxon spokesman Todd Spitler said of the report.
Author: Kevin Crowley, Bloomberg
Guyana had a strong bargaining position when the contract came up for renegotiation in 2016 because Exxon had just made a giant offshore oil discovery, but “inexperienced” bureaucrats failed to press for substantially better fiscal terms, Global Witness said in a report... Government officials were more concerned with a maritime border dispute with Venezuela than negotiating better terms, the group said... “We have complied with applicable laws at each step of the exploration, appraisal and development stages, anything to the contrary is baseless and without merit,” Exxon said in an email.
... The report is likely to re-ignite debate over which political party is best suited to manage the country’s new-found oil wealth just weeks before national elections.