The advent of first oil
While the advent of first oil holds great promise for the development of the country and its people, it is at the same a stark reminder of how much has gone wrong and is going wrong with the administration of the sector. The announcement by ExxonMobil on Friday came as no surprise as it was clear that it would be producing oil long before the scheduled date, a milepost the government clearly would have been pleased with considering that it faces a general election on March 2, 2020.
However, each and every citizen should be cognisant that first oil has arisen to find a caretaker government in place. One that has been of such standing since December 21, 2018. One that is hobbled and been reduced to a placeholder by the Caribbean Court of Justice until general elections are held. One that is unable to do many of the things that a fully empowered government can undertake. One that will be seen by the oil companies and their tier 1 contractors as vulnerable and pliable and therefore susceptible to all manner of compromises.
Citizens should also be aware that Parliament, the legislative arm of government is quiescent. Even though there is an urgent need for the presentation and passage of legislation for the oil and gas sector this is not being done as the legislature is handicapped by the same circumstances as afflict the government. Parliament last met six months ago. Unbelievable.
The public will also know on its own that first oil has arrived at the point of the deepest divide in decades between the two political behemoths as they await general elections. How can such tension and distraction be conducive to ensuring the best results for the people from this major oil project? Again, the main beneficiaries from this division and hyper-partisanship are the oil companies and their proxies.
The limbo that Guyana finds itself in is set to continue for a few months more until a fully mandated government is in place. Hopefully, thereafter there can be a bipartisan approach to the oil and gas sector where both sides of the House and civil society are at one on the oil and gas sector and its future. Until then the people and their watchdogs have to be vigilant.
Such vigilance should extend to developments like the sale of the first lift of Guyana’s oil. The Department of Energy (DE) made no attempt to communicate with the public its plans for the sale of first oil until these plans were thankfully exposed by Bloomberg. The DE then scrambled to do damage control. However, nothing in its statements on December 15th or 16th provided any rationale for why the public could not have been provided with information before the Bloomberg report.
Given the traditional inclination for secrecy between governments and influential multina
tionals, the DE had to be aware that any veiling of transactions for the sale of first oil would lead to a host of questions about the lack of transparency and about the potential for wrongdoing. Yet, the DE appeared willing to let this occur and in relation to the very type of format rife with potential for unsavory transactions: face-to-face negotiating.
These encounters were held last week and it is expected that in due course the public will be notified of the results of these face-to-face transactions. Most importantly, what means existed to prevent any untoward transactions between the face-toface participants? Who monitored and logged their conversations? Who evaluated the various bids for first oil from the contenders? Were contracts distributed to all of the bidders or was price the sole determinant? The slightest deviation from best practices in these interactions could yield illicit windfalls. The people cannot subsist on declarations of the supposed incorruptibility of key players. The best matrix to ensure incorruptibility is full transparency of these processes and responsiveness by the authorities. While it is understood that the bid prices cannot be immediately disclosed, it is imperative that the government report to the public soonest.
First oil has also made more urgent the need for the country not to be a spoiler in the fight against climate change particularly in light of the existential threat it faces from the rise of the sea level. With the climate peril facing the planet, Guyana will next year be producing 120,000 barrels per day of oil which when utilised will release carbon dioxide, the fuel that feeds this grave emergency. Guyana will either have to drop the pretence of wanting to be a green state or take dedicated steps to mitigate the emissions from 120,000 barrels of oil per day. In the four and a half years it has been in office, the government’s performance in this area has been dismal.
While there has been a lot of talk about cleaner energy, the government has failed to deliver. It abandoned the previous government’s large project for hydropower without swiftly settling on viable options. Its major attempt at cleaner energy – a solar farm at Mabaruma – has suffered a series of problems and is yet to deliver. The country will now have to wait until after the general elections for a major shift to clean energy. Its benefits notwithstanding, first oil has exposed the unpreparedness of the country to manage the sector.