Mr. Jagdeo cannot perform as an oil minister

Every Man, Woman and Child in Guyana Must Become Oil-Minded - Part 122

Introduction

The Ali Administration has been promising continually that an independent, competent Petroleum Commission will be appointed to oversee the operations of the oil and gas sector. But like it has done in relation to the confirmation of the constitutional offices of Chancellor of the Judiciary and the Chief Justice, promises by the Administration seem not to count for much. The most immediate breach and broken commitment is of course in relation to the constitutional guarantee to workers that they have a right to free collective bargaining. Parents are painfully aware that that right is openly denied to teachers and worse, they are being victimised for exercising another constitutional right – the right to strike.

While these brazen acts by the Government cannot be exaggerated, it defies logic, commonsense and experience to believe that a political overseer of the dominant sector of the economy is better and more effective than an independent body made up of professionals. Worse, it is costing this country dearly in several ways. Surely such a body would have done a better job overseeing the operation of the 2016 Agreement under which ExxonMobil is allowed free rein to do whatever it pleases. Had we had a Petroleum Commission, Exxon would not have been allowed to get away with overstating of its pre-contract costs; or in flouting the provisions of the Agreement regarding the audit of petroleum operations; the writing-off of US$211 Million in unsubstantiated expenses, or engaging and colluding with the government in violation of the Agreement with respect to the gas-to-shore project; or in violating the implied conditions regarding ring fencing.

The Vice President’s performance

All those violations are possible and permitted because a) the Government has for some reason reneged on its commitment to renegotiate the 2016 Agreement, b) is seen as a walkover, and c) not even capable of achieving the lesser standard of better contract administration. It is clear that the President did not appoint Mr. Jagdeo to oversee the oil sector: What is more likely is that he appointed himself, flexing his muscles as the General Secretary of the PPP/C. But who else can be responsible if not Jagdeo? Put under the microscope, the vice president’s performance in the oversight of the sector leaves a whole lot to be desired. This became so painfully obvious in an answer he gave to a newspaper reporter at his weekly press conference held at the office of the ruling party of which he is the general secretary.

Here is the question posed by a female reporter who from Mr. Jagdeo’s response came not from the Kaieteur News but from Mr. Glenn Lall. “Last week you said Exxon has $20 billion in assets out there which can be sold to take care of an oil spill in the event it occurs. Can you list the assets they have that equal twenty billion.”

My instinct was to quote Mr. Jagdeo’s response in its entirety, but I was not sure that that would get past the editor. Whether the tone of his answer was because it was a woman who asked the question or because she came from the Kaieteur News, or he wanted to impress the audience, is not clear. Yet, his response exposed his own limitations in oil and gas than was ever so glaring before. To parody Winston Churchill, never before have so many mistakes been made in so few words by such an elevated office holder. He asked and answered in the negative the question whether the reporter had read the balance sheet of Exxon, advising the reporter to look at the balance sheet but then demonstrated his own unfamiliarity of those numbers but diverting his audience to Hess and Chevron. For his information, one looks not only at assets but also at the liabilities. At 31 – 12 – 2023, the net assets of Exxon Guyana amounted to US$7 Billion.

His statement of a merger between Chevron and Hess is also wrong. It was a takeover by Chevron.

It was too much to expect vice president to know that if there are changes in the composition of the contractors, the agreement required that such assignment be permitted. Given the challenge by Exxon to the deal, it seems clear that Hess has been pushed aside, in fact if not technically.

The errors mounted. The VP challenged the reporter’s knowledge by asking and telling her that she does not know the value that Chevron placed on Hess, and that that figure was US$60 Mn. Wrong again, except if he disregards the small matter of US$7 billion. Then he goes into a story about the stock market, Hess’ global assets and how much is attributable to Guyana which with his fuzzy math, he put at US$30 billion. In fact, the balance sheet to which he pointed the reporter suggested that even the gross assets did not come close to the number, let alone the net assets, which was about one-tenth of that number. Yet, Jagdeo claims that given the “value that Chevron placed on Hess’ shares in Guyana, you have a $100 billion company in Guyana.”

To conflate stock market price with asset price is not something one expects from a former Finance Minister.

So, he completely evaded the question about Exxon’s US$20 billion and gives a lesson to the reporter that is wrong. But there is also a fundamental issue – Jagdeo expects the book value of an oil company to pay for the environmental disaster involving those very assets. Perhaps he was talking rather than thinking. With this display, clearly Mr. Jagdeo cannot perform as an oil minister, let alone a substitute for a Petroleum Commission.