Partner v. investors: help from Messrs, Routledge, Jagdeo 

Mar 26, 2025 Features / Columnists, The GHK Lall Column

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Hard Truths….

By GHK Lall

“In essence the country is a co-investor, that’s the nature of our Production Sharing Agreement. You share in the upside of the investments that are being made. The good news is, the country doesn’t have to put any capital at risk, doesn’t have to find the capital to make the investment upfront.”

Kaieteur News-  The speaker was Exxon Guyana Chief Managing Director, Mr. Alistair Routledge.  The Exxon top dog here was worth the listening when he first made that statement back in February 2024.  It comes under some stress today, thanks to an October 2023 public representation by none other than the one and only Dr. Bharrat Jagdeo, Guyana’s national oil czar.  Imagine that fusion of forces – an American oil enforcer, and a Guyanese oil chief with an old-line Russian title and mindset.  Sorry, I wandered for a moment.  Here is Dr. Jagdeo.

“We admitted that we are foregoing revenue now in exchange for massive future income because it’s going into new projects that will increase production and so even with the same share of the 50/50 plus the two percent royalty that the future income, because of the bigger scale will be massive in Guyana’s case and we are deliberately foregoing that in this period for that purpose and then trying to grab this bone now could cause you to lose all the bones, the bigger bones too in the future.”

 What is revenue if not cash (or in the unchallengeable words of Mr. Routledge “capital?)”  Then, what does “foregoing” mean, and as Mr. Jagdeo emphasized “we are deliberately foregoing that”, other than taking revenue-cash-capital due to Guyana and plunking it down right back into the offshore oil business going on out there and all over Guyana?  In the simplest possible definition, foregoing is reinvesting into the nation’s oil business.  As a show of confidence, as proof of, I employ an Americanism, having skin in the game.  In a combination of American and Guyanese Creole: putting yuh money weh yuh mouth deh.  I hope that Mr. Routledge has something kind in mind for me, given all this free education he is getting from me.  Just a thought in nonstop efforts to keep him honest. Regarding brother Jagdeo on that score, it is an uphill task (uphill, but not insurmountable).  For he is too much of an authoritarian to have time for the ways of a logician.

If the 6.6 million acres that Guyana put up, and as I asserted, was scratched by Mr. Routledge, then he now has his hands full and a world of explanation to give on how Guyana’s revenue foregone is not an investment of capital in the Exxon oil projects 120 miles from land.  For emphasis, the good doctor Jagdeo did not have one of his more excitable and less controlled moments, that he was so unwise, so reckless, as to dump that revenue foregone into the ocean.  Where else could that revenue-capital have gone, but as a reinvestment into those costly offshore oil projects?  To forego that revenue (bird in the hand) is to put “capital at risk” and pay homage to Professor Routledge’s own words.  I was tempted for a moment to say brother Routledge, then thought better of it.  There are brothers, then there are brothers.

My position that Guyana is an investor is unchanged.  In fact, it is reinforced by both Dr. Jagdeo (“we are deliberately foregoing that”) and Exxon’s Delta Force Commander on the ground in Guyana, Mr. Routledge (“the country doesn’t have to put any capital at risk”).  Guyana is putting capital at risk, sir.  The extra money that Guyana may, could, have gotten around 2027 is now under increasing threat due to rising fears of falling oil prices.  Its investment decision may not payoff at that time.  Payoff is return on capital invested, which Mr. Routledge know is the a, b, c, of cash on the barrel (and by the barrel) that is put on the investment table.  No capital, no reward.  No risk, no reward.  The greater the risk, the bigger the reward, when the stars are favourable.  I do not think that I need to say more, should conclude this lecture.  But I have one more dollar to deposit in this Guyana-is-an-investor series.

In three separate reports dated 2017, 2019 and 2019, the International Monetary Fund (IMF) stated: “This asymmetrical treatment of profit and cost oil will benefit the contractor at the expense of delaying government revenue.”  The focus there was on the negatives of not ring-fencing.  But there is another translation for the poor of Guyana, which is now shared.  When there is a glaring imbalance between money coming in and money going back into the oil business (not staying with the host oil-producing country,) then the country is giving up too much, and there is only one winner and one loser.  Though Mr. Routledge is a treasured guest in my welcome register, I must do my duty to the Guyanese people.  Exxon is the winner.  The one loser left is Guyana.  Because I am on my best behaviour today, there’s no folded fist identifying Dr. Bharrat Jagdeo as that loser.  Revenue foregone today by Guyana makes Guyana an investor from now right alongside Exxon.  How I see it, I call it.

(The views expressed in this article are those of the author and do not necessarily reflect the opinions of this newspaper.)                       

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