(The St. Kitts Nevis Observer) – A natural-resource watchdog group alleges in a new report that Guyana may have lost as much as $55 billion in potential revenue by poorly negotiating a deal with Exxon Mobil to pump reserves that are expected to make the small South American country into the world’s newest major oil producer.
London- and Washington-based Global Witness says in the report released Monday that the 2016 deal giving Guyana 52 percent of the revenue from oil pumped from a massive offshore oil block was far better for Exxon than Guyana because such deals typically give national governments 65 to 85 percent of revenues.
“A country with inadequate schools, a declining sugar industry, and crumbling sea defenses that cannot protect it from rising sea levels deserves a better deal,” the group says.
Exxon said the report failed to account for the risk the oil giant assumed in exploring the unproven deep water area known as Stabroek.
“The conclusions drawn are based on hypotheticals and circular reasoning that do not take into consideration Guyana’s status as a frontier hydrocarbon province,” the company said Monday. “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.”
Much of the area also is subject to a border dispute with Venezuela.
A Guyana government spokesman said officials were reviewing the report and planned to issue a statement later Monday.
Exxon began shipping the first tankers of Guyanese oil this year and the offshore fields are estimated to contain more than 8 billion barrels, one of the world’s largest reserves. The revenue is expected to transform the finances of Guyana by generating an estimated $168 billion over the life of the project, 120 times the country’s annual budget.
Global Witness said it had found no evidence of corruption in Guyana’s 2016 deal with Exxon, but called for closer scrutiny of the relationship between Natural Resources Minister Raphael Trotman and Nigel Hughes, who has worked as a lawyer for Exxon.
Trotman and Hughes are leaders of a Guyanese political party, Alliance for Change.
“The relationship between Trotman, Hughes, and Exxon should be investigated to determine the existence or extent of any conflict of interest,” the report said.
Neither man could immediately be reached for comment on the report.
Guyana is a relatively poor nation of about 740,000 people. It holds general elections on March 2 and the opposition People’s Progressive Party has issued some statements indicating that it will seek to renegotiate oil concessions, although the specifics of its position remain unclear.