Our investigation reveals how, under Exxon’s lucrative oil deal, Guyana
will lose out on up to US$55 billion, according to a new OpenOil analysis. This
is money that Guyanese people have said could be used to build much-needed
roads, hospitals, schools, and sea defenses to protect the 90% of the
population at risk from rising sea levels.
Download the full report, Signed Away: How Exxon’s exploitative deal deprived Guyana of up to US$55 billion (PDF, 3 MB)
In April 2016, US oil
giant Exxon had a problem. The company had recently found oil off the coast of
Guyana in the Stabroek oil block. This find would turn out to be one of the
largest in the world in recent years. But Exxon’s Stabroek license was old,
shrinking, and would expire in only two years, putting in jeopardy the
company’s increasingly valuable asset.
Exxon needed a new deal.
So the powerful oil company
aggressively negotiated a deal with inexperienced officials that left Guyana
short of up to US$55 billion, according to an OpenOil analysis. Only three days
after getting its new license, Exxon announced its massive find.
Guyana must push Exxon for a fair Stabroek deal. This done, Guyana can do its part to adapt to climate change and help fight the global climate emergency by banning all other oil drilling.
- Guyana is set to lose out on up to US$55 billion from the Stabroek license – an average of US$1.3 billion per year in a country with an annual budget of US$1.4 billion, according to a new analysis.
- To get its deal, Exxon employed aggressive and rushed negotiating tactics.
- At the same time, Guyana’s negotiators were inexperienced, acted against expert advice, and underplayed Guyana’s strong bargaining position.
- One official – Natural Resources Minister Raphael Trotman – even knew Exxon would soon announce the results of its new oil find, but rushed to sign Stabroek anyway, despite advice from experts to seek further information.
- Guyana is set to make up eight percent of Exxon’s entire crude oil output through to 2056.
To assess whether Exxon’s Guyana deal was a good one, Global Witness commissioned a study from OpenOil – a company that produces fiscal analyses. OpenOil’s report, called How much revenue will Guyana lose out on in Stabroek? can be downloaded here, and its fiscal model can be downloaded here. For comments on OpenOil’s report from Exxon and Guyanese ministers, see the Global Witness report.
How Guyanese people would use US$55 billion
Exxon has stated that
the Stabroek deal is good for Guyana and the company has done nothing wrong. It
has contested OpenOil’s conclusions, arguing that Guyana is a “frontier” oil
province. Trotman also told Global Witness that getting maximum revenues from
Exxon was not the government’s main aim and the country needed Exxon to help
protect its borders from Venezuela.
But in July 2019, Global Witness interviewed citizens across Guyana, asking what they thought these lost oil revenues should be spent on.
one of the poorest countries in the Americas, with low education and health
spending and high unemployment. A remarkable 90% of the population is also threatened
by rising sea levels. Guyanese people told us:
If they don’t take care of the sea defense, they won’t get any agriculture because the sea defense is going to kill everything, everything going to finish. - Farmer in Mahaicony
We have to encounter very long lines at the hospital, I had a personal experience with that and it wasn’t nice– we need more staff, more facilities, so that people can be attended to quickly. - Student in Georgetown
Just look at this structure – is this child friendly? …I don’t think teachers would want to come and work under these conditions. - Activist in Linden
Guyana can get a better deal. This is how to start:
- The Guyanese government should renegotiate Exxon’s Stabroek oil license.
- With additional revenues from Stabroek, Guyana should stop additional drilling and do its part to stop the climate emergency.
- The Guyanese government should investigate the process by which the Stabroek license was negotiated.
- The Guyanese government should adequately resource and ensure the independence of its anti-corruption agencies.
- The US State Department should support Guyana by encouraging Exxon to renegotiate the Stabroek contract.
- The US Securities and Exchange Commission should promote transparency in the oil sector by strengthening its proposed rule for Section 1504 of the Dodd-Frank Act.
See the full report for more details on our findings and recommendations.
In October 2020 this report was updated, with references to the issue of Guyana’s border with Venezuela changed from “dispute” to “controversy”.