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The PNC-R’s 20-Point Plan for Guyana’s Oil and Gas Sector

After years of dithering and delays, the People’s National Congress Reform (PNC-R) recently unveiled a 20-point plan – more a statement of intent – for managing Guyana’s fast-moving oil and gas sector. This plan, coming eight years after the signing of the 2016 Petroleum Agreement by the PNCR-led coalition, and after four years of silence and ambivalence from Aubrey Norton as Leader of the Opposition, represents at best a promise to review rather than act. While the plan outlines a comprehensive set of policies and strategies, it also raises questions about its effectiveness in addressing the fundamental issues which the country faces with respect to the sector.

Strengths of the Plan

The plan demonstrates a commendable attempt to address a number of aspects of oil and gas sector management with firm statements on:

1. The proposed establishment of an Advisory Team (AT) of professionals within 90 days of taking office will bring much-needed expertise to the government’s decision-making process. This interdisciplinary approach, including specialists in business, law, economics, and engineering, among others, could lead to more informed and holistic policymaking.
2. The establishment of an independent Petroleum Commission which strengthens governance, enhance oversight and reduce political interference in the sector’s management.
3. On environmental protection, including the reinstatement of full liability coverage and prohibition of gas flaring, and concerns about the industry’s environmental impact.
4. The emphasis on capacity building, skills development, and involvement of the diaspora in the oil and gas sector could potentially boost local content and expertise over time.
5. The commitment to transparency, including the publication of information protocol, which would restore public trust and enhance accountability in the sector.
6. The proposal for an independent Inspector General’s (IG) Office with a 24/7 anonymous hotline is a novel idea to address concerns about corruption and improprieties, if properly staffed by honest professionals.
7. A formal feasibility study to determine the viability of creating a National Oil Company (NOC) and/or a local refinery is not without some merit, but the lessons of Trinidad and Tobago should give us pause.

Limitations and Concerns

Unfortunately, these positive developments are undermined by an equal number and arguably more serious limitations on key issues, such as: 

1. Paying the taxes for the oil companies: It is mindboggling that the PNC-R is not insulted by this effrontery. In this day and age, how can any government pay the taxes of any company at the expense of the country’s public servants and services? What was needed on this issue is immediate advocacy for the Government to sign the OECD/G20 Tax Framework which would bring in immediate and substantial revenues and restore some decency to the arrangement.

2. Royalties: This is a non-renewable resource and once Exxon and its mates have walked away with the lion’s share of oil revenue, Guyanese will have to live with the consequences, including the environmental implications. All for 2%!

3. Ringfencing: This is elementary and common in the oil sector, follows the matching concept in accounting, and is permissible under existing legislation. What is there for the PNC-R to review and consider? Does it know that come the end of 2027 the matter will be moot since the Exploration Licence will have expired?

4. Local Content: Seemingly unaware that local content was part of the mid-eighties legislation, the plan does not establish policies, strategies and targets for increasing resident Guyanese participation in the industry. Its nemesis also boasts of local content legislation but ignores the fact that this only succeeds with robust supervision and weeding out the pervasive “Guyanese for sale” practice used blatantly to circumvent the legislation.

5. Revenue Management: The plan’s approach to the Natural Resource Fund (point 17) is vague, seemingly not sufficiently informed, merely committing to a review and potential restructuring. Given the critical importance of managing oil revenues for Guyana’s development and intergenerational savings, this point warranted more detailed treatment.

6. Stability Clause Unaddressed: Equally disappointing is the failure to confront the 40-year stability clause in the current agreement, which not only limits Guyana’s ability to adjust to new and unforeseen developments but more seriously, places a fetter on the powers conferred by the Constitution on the National Assembly to make, amend and repeal laws in the nation’s interest. One has to assume that this is no accidental omission, and it places the PNC-R in the same position as the PPP/C – the dubious embrace of sanctity of contract over permanent sovereignty over natural resources and the primacy of the Constitution.

7. Renegotiation: Nothing disappoints about this plan like the failure to commit to contract renegotiation as and when circumstances warrant. While point 10 mentions a “top-to-bottom review” of the 2016 Stabroek Block Production Sharing Agreement (PSA), the plan is silent on this singular opportunity afforded under the Agreement to address the disastrously fundamental imbalances in the current agreement.

8. Vague Language: Many points in the plan use non-committal language such as “review,” “evaluate,” and “study,” without any commitment to action. This ambiguity and timidity, even if accidental, can easily accommodate to inaction or minimal change if the PNCR comes to power.

9. Timeline and Implementation: While the plan sets a 90-day timeline for establishing the Advisory Team, which is as far as it goes on any timeline or implementation strategies. You can never miss a non-deadline!

To be concluded Next Week

Reclaiming Guyana’s Oil Wealth: Confronting Political Cowardice and the Surrender of Sovereignty Part 2

Introduction

Last week I called out the political leaders for their cowardice and dishonesty for hiding behind “sanctity of contract”. Someone pointed out that I seem to have spared Shuman’s Liberty and Justice Party and the United Force (if it exists). That was an oversight.

The response to last week’s column was silence from the political parties, no doubt hoping that this too will pass. I will not let up or let them off the hook. So, what I have done is compiled a Survey Questionnaire which I am sending not only to the political parties but to business organisations, including the PSC, to trade unions and to other CSO’s in the country.

Before going into the Survey, I want to address some of the simple options available to our political leaders in righting some of the wrongs. Here are a few.

Independent Petroleum Commission. The establishment of an Independent Petroleum Commission, free from political interference and empowered to stand up to multinational corporations, is not just desirable – it is absolutely necessary to reassure Guyanese that everything possible is being done, and is seen to be done, in protecting the country’s sovereignty over its natural resources. Such a Commission must be independent of the politicians rather than their conduits, as is the case of so many state entities, commissions and other bodies. A united national front is crucial, but it must be one that places Guyana’s interests first. Such a Commission should include economists, petroleum specialists, legal and financial experts who can match the expertise of the oil companies at the negotiating table.

OECD/G20 Tax Framework. Another important option available to the country is the ability to leverage international agreements, like the OECD/G 20 Framework for a 15% minimum global tax, to our advantage. Guyana is in the unfortunate and undesirable position in which it is among a minority of countries not to have ratified the Framework. This omission can be corrected in the shortest possible time, making the tax regime of the country compatible with international norms. Once done this is done, it would be hard to see Exxon crying foul and a breach of the 2016 Agreement. Instead of hiding behind the shield of “sanctity of contract,” this tool will provide Guyana the opportunity to collect billions in taxes for which it can issue legitimate receipts instead of what now takes place. Equally importantly, it does no harm to the country’s reputation for following international norms.

Ringfencing: This is probably the easiest of all. All the Minister of Petroleum has to do is set a simple condition in a Production Licence that exploration costs in looking for petroleum outside of the Production area are not recoverable expenses against revenue from production. It is the ultimate in dereliction that this condition has NEVER been applied.

The betrayed citizens

It is against this background that citizens must demand that all political parties publicly declare their positions and strategies on the 2016 Agreement and hold them accountable for any stance that compromises our national sovereignty. This should include a commitment to full transparency in all dealings with oil companies, regular public updates on the state of our oil resources and revenues, and a clear plan for how to increase our take and how oil revenue will be used to benefit all Guyanese.

As Guyanese look towards the 2025 elections, they deserve more than empty rhetoric and vague promises, or the repetition of broken promises. They also need leaders who understand that true sanctity lies in protecting the interests of the Guyanese people, not in defending a flawed contract and protecting the oil companies to the detriment of the country. We need comprehensive, expert-backed proposals for renegotiation that reassert our sovereign rights over our resources.

The upcoming elections are probably the last chance for the country to correct the misdeed of the APNU +AFC Coalition and the broken promises of the PPP/C. What is staggering is that the Agreement allows for its modification by mutual consent which both major parties use as a scare-mongering bogeyman, accusing critics of calling for an abrogation of the Agreement. To use Jagdeo’s words, “they have sold us out,” but the only thing is that he has now become part of the “they.”  The tools are available, and the opportunities exist to level the playing field with oil companies.

What does not exist is the political will and courage to face up to the evil brought upon the country, led by politicians who cower in the face of this challenge and who willingly cede our sovereignty to foreign interests.

The Survey

Here is a brief overview of the survey questionnaire.

First and foremost, the Questionnaire seeks to understand awareness of Article 31.2 of the Petroleum Agreement, which allows for amendments with the contractor’s consent. The survey highlights several contentious issues within the agreement:

1. The meagre 2% royalty rate
2. Lack of ring-fencing provisions
3. Guyana paying taxes on behalf of oil companies
4. Oil companies receiving tax certificates for credits in their home countries for taxes which they have not paid.
5. Guyana only being guaranteed 12.5% of gross revenue, in addition to the royalty.

Perhaps most alarming is the 40-year stabilization clause, which prevents new legislation that could affect oil companies’ interests. This clause effectively surrenders Guyana’s sovereignty and ability to adapt its laws to changing circumstances for decades to come.

Another critical issue is the Natural Resource Fund (NRF) and its withdrawal rules. The current arrangement, which allows the government to withdraw US$3,700 million of the first US$4,000 million the country earns per year, raises serious concerns about intergenerational equity and long-term resource management.

It’s worth noting that the petroleum world has numerous examples of countries successfully renegotiating oil contracts when circumstances change or when original terms are found to be against national interests. Our leaders’ failure to even consider this option is a dereliction of their duty to protect Guyana’s interests.

Respondents have been given fourteen days in which to respond and the results will be highlighted in future columns. It will be a good measure of who deserve the support of the Guyana electorate in 2025. The results will be published.

Please note that the questionnaire is available on chrisram.net and I invite everyone to participate.

https://docs.google.com/forms/d/e/1FAIpQLSflDY4pKOVQ7FQbMbnI98lrTveGIgDkd2pMgxoJj8GD0tSTYQ/viewform?usp=sf_link

Reclaiming Guyana’s Oil Wealth: Confronting Political Cowardice and the Surrender of Sovereignty

Introduction

Over the past three weeks, this Column has shown how the PPP/C has reversed its pre-election promise to review and renegotiate the 2016 Petroleum Agreement. But it actually did worse – reversed its commitment to an independent Petroleum Commission, failed to provide elementary conditions on ringfencing, and is one of the minority of countries refusing to sign the OECD Framework on a minimum corporate tax on major companies. As Guyana gears up for general and regional elections in 2025, thoughts should turn on whether the PPP/C will pay a political price: they should but that is unlikely because none of the political parties is any better.

From all of them – the PNC -R, the AFC, ANUG and the WPA – there is a silence that is not only disappointing and deafening but amounts to a collective surrender of our sovereignty by the entire political establishment. The PPP’s dramatic shift from promising to “review and renegotiate” to now parroting “sanctity of contract” is like a stab in the back of our country. This phrase has become their shield, a convenient excuse for inaction, a dereliction of duty and a betrayal of the national interest. But let us be clear: there is no sanctity in an agreement that fails to protect the interests of the Guyanese people. The only thing sacred should be our nation’s right to benefit fully from its natural resources.

Exxon over Guyana 

This misplaced reverence for a flawed contract is not just misguided – it’s a dangerous ceding of our national sovereignty. By treating the 2016 Agreement as untouchable, our leaders have effectively handed over control of our resources to foreign corporations. They have prioritised the interests of ExxonMobil and its partners over the wellbeing of the Guyanese people.

The stability represents a surrender of our right to adapt our laws and regulations to changing circumstances and national needs. This seems more like subjugation rather than sanctity. It ignores the fundamental principle of fairness in international law. After all, the petroleum world is replete with cases in which countries have successfully renegotiated oil contracts when circumstances have changed, or when the original terms were found to be against their national interest. Our leaders’ failure to even consider this option is a dereliction of their duty to protect Guyana’s interests.

The other Parties

The PPP/C’s reversal and culpability in no way exonerate the PNC -R whose leader has literally been all over the place when it comes to taking a position. That its former leader President David Granger reportedly pressured his Minister into signing the lopsided agreement is hardly an excuse for its cowardly silence. The Party seems bankrupt of ideas, bankrupt of expertise and bankrupt of courage in what is clearly the most important issue facing the country now and for the next thirty years. Their current leader’s apparent ignorance of the agreement’s details is an indictment of the Party’s fitness to govern. Such willful ignorance is not just embarrassing; it’s a dangerous abdication of their role as the opposition, failing to provide the necessary checks and balances our democracy requires.

The WPA, once a party of principled struggle, has been reduced to debating how to distribute crumbs while our nation’s wealth is carried offshore. Their myopic focus on cash transfers without addressing the fundamental inequities of the agreement is a betrayal of their revolutionary heritage and a sad spectacle of a party that once fought for true independence now acquiescing to what amounts to modern-day economic colonialism.

And the AFC’s claim of studying the issue without producing any tangible output is political procrastination at its worst. While the signature of its General Secretary Raphael Trotman brought the illegal Agreement into force, he has written a book calling for  a Commission of Inquiry into the Agreement, implicitly suggesting that there are good grounds for serious concern. The Party seems hamstrung by the election as its Leader Mr. Nigel Hughes  who is in another role, the Attorney-at-Law for all three of the contractors – Exxon, Hess and CNOOC. Hughes has made it clear that he has no intention to give up his professional relationship, adding that he would not seek to influence the Party’s position. While barely acceptable, it is surely unfortunate that the Leader is unable to lead in such in critical sector of the economy.

The other Party of some note is the ANUG, also led by an attorney-at-law but which has been the most silent of all.

Conclusion

This collective failure to challenge the 2016 Agreement is a de facto endorsement of the surrender of our sovereignty. By their silence and inaction, every major political party in Guyana has become complicit in this grand ceding of our national rights and resources. They have collectively failed to uphold the fundamental principle that a government’s primary duty is to protect the country’s resources and to advance the interests of its citizens. The citizens are faced with not a single party providing leadership, guidance, opportunities for debate or any other form of assistance, information or direction on our oil economy and our Government’s subservient role in the sector.

What makes the whole situation so very bad is that they show no interest in the provision in the Agreement which allows Guyana to ask for any amendment or modification which Article 31.2 of the Petroleum Agreement. They ought to be ashamed to place “sanctity of contract” over permanent sovereignty over our natural resources and ousting the role of the Parliament and the Constitution.

This column acknowledges the consistent role played by Mr. Glenn Lall and the Kaieteur News and the column which this newspaper has carried since June 2017. Unfortunately, our politicians seem oblivious of all that is being said and written, immune from both direct and indirect criticisms of their disservice and the cost of their inaction and disinterest to our country.

Next week’s column will identify opportunities and make recommendations which they are likely to ignore. What a shame!