By Samuel Sukhnandan
A Caribbean expert in the oil and gas industry believes Guyana has the opportunity to get a better deal when finalising a contract for the second oil find, and will stand a greater advantage given the global name it has made for itself, due to the hold-massive oil discoveries made here.
Donald Baldeosingh who delivered a lecture on oil and gas, using the Caribbean context at the Nations University on Wednesday evening, said there are a lot more opportunities to be garnered from the recent oil discoveries and other potential discoveries both onshore and offshore Guyana.
“Guyana is very prominent on the world oil map right at this moment. There is a lot of hype and a lot of interest. So, Guyana would be in a better position to negotiate another contract now in another block based on what is going on and what is happening in this phase,” he said.
While there are many concerns regarding the Government’s reluctance in releasing the contract signed between them and US oil giant ExxonMobil, the Trinidadian oil and gas expert said the time has come for everyone to stop dwelling on the past and focus on the opportunities that lies ahead.
Baldeosingh, a former Chairman of the Petroleum Company of Trinidad and Tobago Limited (Petrotrin) and the current President of the ENMAN Group said that Guyanese need to be patient because information regarding how much Guyana gets and spends from its oil revenues will be made public.
He said, “They will be able to do their own arithmetic to figure out what that means in relation to production of the oil. I also feel as more and more Guyanese go up the learning curve, understanding the contracts, there will be less and less unease about how they are currently structured.”
While Guyana will be receiving a two per cent royalty on gross earnings and 50 per cent of the profits of the oil proceeds when production begins, some people feel that is not enough.
He said there are several options that are available to Guyana to change the contract, but he feels given that the first contract has already been inked; doing that could only lead to uncertainty in the future with other companies. Baldeosingh warned the Government not to pursue this matter.
“I think we just have to accept that this is what is happening,” he said, while asserting that Guyana accepted a deal based on limited experience.
Another important factor that Baldeosingh spoke about is the fact that the Government of the day needs to exercise a high level of discipline, when dealing with the oil revenues. He said while it may be good to use this money to assist with the development of infrastructure and telecommunication, if the money is not appropriately spent, Guyana could experience the same issues as Trinidad and Tobago.
“There is not always going to be a feast, but there are famines too. So, Guyana needs to set up a regulatory framework and a good step in that direction of course is a Sovereign Wealth Fund (SWF). But that’s not all, setting it up is fine, but you need to ensure that it is properly managed,” he added.