# The Contract: Inside ExxonMobil's Guyana Oil Deal

An episode of [Drilled](https://invisiblenetwork.ai/podcast/1439735906), 21 Mar 2023, 35 min.

Audio: https://podtrac.com/pts/redirect.mp3/tracking.swap.fm/track/SxlTEPDY7xDg35RXkASs/pdrl.fm/3e5572/traffic.omny.fm/d/clips/e73c998e-6e60-432f-8610-ae210140c5b1/9a7ab5ee-ce11-48ff-a544-b3ec00ea9b1e/170f38b7-c088-4ab4-bb64-b3ec00f03654/audio.mp3?utm_source=Podcast&in_playlist=7f82f371-6316-4ea6-a108-b3ec00ea9b2d

After a year of pressure from local press and civil groups, the Guyanese government finally released its oil contract with ExxonMobil to the public. The International Monetary Fund (IMF) calls it an unfair deal for Guyana. Some local leaders implore the government to renegotiate the contract, but others say that's a fool's errand and fighting the contract should be done in court. Additional resources: The Quest to Defuse Guyana’s Carbon Bomb See omnystudio.com/listener for privacy information.

## Transcript

[0:00] Speaker 1: Guyana, It's Glen again, tiktoking.
[0:04] Speaker 2: I am on TikTok again, ticktak.
[0:08] Speaker 1: I'm here to tickle you guys again.
[0:12] Speaker 3: This is Glenn Law. He's the publisher of the newspaper
[0:15] Speaker 3: Keana Wilberg works for Kitter News. He is not your
[0:20] Speaker 3: average publisher. And I'm not just talking about his penchant
[0:23] Speaker 3: for statement hats and snazzy shirts.
[0:27] Speaker 4: A change my short. I had a while Toby off
[0:30] Speaker 4: this man.
[0:31] Speaker 3: If you watch Law's videos, you will be seeing him
[0:34] Speaker 3: in different clothes, different shoes, and with glittering jewelry. But
[0:38] Speaker 3: Law isn't just a larger than life character. He's also
[0:41] Speaker 3: an influencer. He has more than twenty thousand followers on
[0:45] Speaker 3: TikTok and he's a content machine. He puts out a
[0:49] Speaker 3: video almost every day.
[0:51] Speaker 1: Glen again, tiktoking.
[0:53] Speaker 2: It's Friday, Glenn ticking you, but this time I'm taking
[0:56] Speaker 2: you guys differently.
[0:57] Speaker 3: Lots of his videos have over one hundred thousand views.
[1:01] Speaker 3: That's a pretty big number in a country with fewer
[1:04] Speaker 3: than eight hundred thousand residents. And Glenn Law hosts a
[1:07] Speaker 3: show on YouTube that he broadcasts on Kit's radio station.
[1:12] Speaker 3: A newspaper a radio show, a YouTube channel, tiktoks. It's
[1:17] Speaker 3: kind of a lot, but it's all part of a strategy.
[1:20] Speaker 3: Law doesn't just want to put information out into the world.
[1:23] Speaker 3: He wants to reach the masses and he knows how
[1:26] Speaker 3: to speak their language. Literally, it's a.
[1:29] Speaker 5: Version of Patois called Kreoles, so it's English and we
[1:33] Speaker 5: have our own lingo that's mixed into that.
[1:35] Speaker 3: That's Keana Wilberg, the journalist from Lall's newspaper Kitter News
[1:39] Speaker 3: that we heard from last time. She says most people
[1:42] Speaker 3: in Guyana, and especially working class people, speak Creolis. We
[1:47] Speaker 3: heard it a lot too, like when our taxi driver
[1:50] Speaker 3: took us to get some typical Guyanese snacks on the
[1:53] Speaker 3: way to the Kijer News office.
[1:55] Speaker 6: It's hot. It's hot, very hot, too hot. No, it's
[2:07] Speaker 6: ara much.
[2:08] Speaker 3: You said you didn't need it.
[2:10] Speaker 6: I don't eat I eat it one a mistake?
[2:13] Speaker 7: That does that? Does it?
[2:14] Speaker 6: Kind of does it? Kind of take me experience. They're
[2:18] Speaker 6: going to explore an experience like that for no Miwanaka
[2:22] Speaker 6: and peple not too hot.
[2:26] Speaker 3: I'm not sure if you caught that, but we were
[2:28] Speaker 3: talking about eating some of Guyana's famously spicy peppers and
[2:32] Speaker 3: our driver was speaking in rapid fire creoles.
[2:36] Speaker 8: So we report the news and that's for.
[2:41] Speaker 5: Middle class and then that is translated into a written
[2:46] Speaker 5: column that we have called them boise and then mister
[2:51] Speaker 5: Glenlow he would also use his platform to do an
[2:55] Speaker 5: extended version of that.
[3:00] Speaker 3: This strategy of speaking to people in a way they
[3:03] Speaker 3: understand and relate to it makes a big difference, especially
[3:07] Speaker 3: when you're talking about complicated, messy things like oil contracts.
[3:13] Speaker 3: Remember the team at kit News was waiting for months
[3:16] Speaker 3: for the government to release its contract with ExxonMobil. Finally
[3:20] Speaker 3: at the end of twenty seventeen, they did December twenty eighth,
[3:25] Speaker 3: twenty seventeen. To be exact, Christmas is a very special
[3:31] Speaker 3: moment for Guyanese and it's.
[3:34] Speaker 8: A period that the government knows if it wants to
[3:38] Speaker 8: rush anything that needs careful attention, they put it at Christmas,
[3:44] Speaker 8: which is what they did.
[3:46] Speaker 7: Ah.
[3:47] Speaker 3: Yes, the classic news dump. Every government and corporation in
[3:52] Speaker 3: the world knows this tactic. If you're releasing news you're
[3:56] Speaker 3: not super proud of or that you suspect might have
[3:59] Speaker 3: some backlash, you put it out on a Friday evening
[4:02] Speaker 3: before a long weekend or during a big sporting event,
[4:06] Speaker 3: or in the week between Christmas and New Year's but
[4:09] Speaker 3: this wasn't just any news jump.
[4:12] Speaker 9: Finally, the government said, okay, at six o'clock today, we're
[4:16] Speaker 9: going to release the contract. So Eggxon decided to bowl
[4:19] Speaker 9: a press conference just about two or three hours before that.
[4:24] Speaker 3: That was the first press conference Exon had in Guyana,
[4:28] Speaker 3: and they've hosted very few since then. But this contract
[4:32] Speaker 3: was really complicated and full of legal eese, so Exon
[4:35] Speaker 3: decided they would break it down for reporters and point
[4:38] Speaker 3: them toward the most important bits helpful.
[4:42] Speaker 9: It was in a boardroom at the Marriot Hotel, right,
[4:46] Speaker 9: and my colleagues and I we left. Everyone is down
[4:50] Speaker 9: serious and for the first time, because we normally don't
[4:52] Speaker 9: like to share our angles, but this was the first
[4:55] Speaker 9: time everybody was huddled together.
[4:57] Speaker 3: Did you understand what.
[4:58] Speaker 8: This guy was talking about? What is this?
[5:02] Speaker 3: What did he mean by this? Did he really say this?
[5:05] Speaker 9: And I'm talking about season journalists, journalists who've been in
[5:09] Speaker 9: this game for like twenty thirty years, covering so much
[5:13] Speaker 9: here and abroad, and they were confused. And my editor
[5:19] Speaker 9: in chief, who was during the time, he was saying,
[5:22] Speaker 9: you know, this is this is exactly what this press
[5:26] Speaker 9: conference is intended to do.
[5:29] Speaker 3: Remember, the contract still wasn't going to be released for
[5:33] Speaker 3: another few hours, so everything Exon told these reporters at
[5:37] Speaker 3: the press conference it was just like a heads up
[5:40] Speaker 3: before anyone could actually read it, you know, just fyi.
[5:44] Speaker 3: Then a few hours later, the government did release the
[5:48] Speaker 3: contract and it was chaos.
[5:53] Speaker 9: This is something that was hidden from media since nineteen
[6:01] Speaker 9: ninety nine.
[6:02] Speaker 3: Nineteen ninety nine was the year Guyana first signed a
[6:06] Speaker 3: contract with Exxon Mobile. Then it was revised in twenty
[6:09] Speaker 3: sixteen after oil was discovered.
[6:13] Speaker 9: No one saw this document. No one even knew what
[6:16] Speaker 9: certain terms meant. Nobody didn't understand what what what is
[6:22] Speaker 9: two percent royalty? What is fifty to fifty profit oil?
[6:26] Speaker 9: What is profit oil? What is cost oil? And they're
[6:30] Speaker 9: talking to us with all of these different terms, and
[6:32] Speaker 9: the conversation just went over everybody's head.
[6:36] Speaker 3: So the contract was unintelligible to anyone who hadn't spent
[6:40] Speaker 3: years reading oil contracts. And to make things even more confusing,
[6:45] Speaker 3: Exon had primed everyone with information. They wanted people to
[6:49] Speaker 3: know parts of the contract. They wanted to point people's
[6:53] Speaker 3: attention toward. No one could make heads or tails of
[6:56] Speaker 3: it or tell what was really going on. In fact,
[6:59] Speaker 3: it would take you years for local lawyers and international
[7:02] Speaker 3: experts to wrap their heads around what exactly this contract
[7:06] Speaker 3: laid out. As everyone did start to make their way
[7:09] Speaker 3: through it, one by one, they came to the same conclusion.
[7:13] Speaker 6: The majority of people, including the IMF, has gone on
[7:18] Speaker 6: record as.
[7:19] Speaker 10: Saying it was a very unfair deal for.
[7:23] Speaker 11: The Vienna, a historically bad, profoundly bad contract that the
[7:27] Speaker 11: government got with Exxon.
[7:29] Speaker 3: It's a balance of power problem.
[7:33] Speaker 7: Once the contract assigned, then one of Excellon's sort of
[7:37] Speaker 7: playbooks is to refuse to renegotiate.
[7:42] Speaker 3: That was head of the Transparency Institute of Guyana Frederick Collins,
[7:46] Speaker 3: investigative journalist Antonio Juhas, and journalist Steve call who wrote
[7:51] Speaker 3: about Excellent Mobile in his book Private Empire. One by one,
[7:56] Speaker 3: environmental nonprofits, government corruption groups, and the International Monetary Fund
[8:02] Speaker 3: came out saying this was a bad deal for Guyana.
[8:05] Speaker 3: When I asked Exon about it, they sent me the
[8:08] Speaker 3: following statement quote, our Guyana operation is in what's considered
[8:13] Speaker 3: a frontier offshore exploration basin the terms of our petroleum
[8:18] Speaker 3: agreement with the government of Guyana are common in the
[8:21] Speaker 3: industry and competitive with other countries at a similar stage
[8:25] Speaker 3: of resource discovery. But even some conservative pro oil voices
[8:31] Speaker 3: have been pointing out major flaws in the contract, which
[8:34] Speaker 3: begs the question is this oil boom actually gonna make
[8:38] Speaker 3: Guyana rich? We'll get into it after this quick break.
[8:43] Speaker 3: This is light, sweet crude, and I'm Amy Westervelt.
[9:03] Speaker 5: Ladies and gentlemen, for a pleasure to welcome you to Georgetown, Guyana.
[9:07] Speaker 4: Please remain seated with your seatbelt securely fastened until we
[9:10] Speaker 4: are partipicate.
[9:11] Speaker 11: If the Captain turns.
[9:12] Speaker 9: Off the fast and seatbelt side, please love check.
[9:14] Speaker 3: When we landed in Guyana, one thing was very apparent.
[9:19] Speaker 3: Government officials were hesitant to talk to us. A few
[9:22] Speaker 3: ministers and even the Vice President's scheduler had gotten back
[9:26] Speaker 3: to us about the interviews, but then gone very very quiet.
[9:29] Speaker 3: Then people kept asking us one question over and over.
[9:34] Speaker 3: Had we seen the Vice News story on Guyana?
[9:38] Speaker 11: Guyana is one of the fastest growing economies in the world.
[9:42] Speaker 3: Is the Chinese that are building this right?
[9:44] Speaker 10: Yes?
[9:44] Speaker 3: But these deals have come with claims of corruption. Do
[9:47] Speaker 3: you accept bribes?
[9:49] Speaker 6: No?
[9:49] Speaker 12: I don't were a new reporters come from abroad.
[9:52] Speaker 13: They always want to make a developing country leader look corrupt.
[9:58] Speaker 3: In June twenty two, Vice News aired a damning piece
[10:02] Speaker 3: on corruption in Guyana. Journalists went undercover, posing as a
[10:07] Speaker 3: Chinese businessman who was interested in investing in the country
[10:11] Speaker 3: and his secretary. They met with various Chinese businessmen who
[10:15] Speaker 3: claimed to be middlemen for bribing government officials, particularly the
[10:20] Speaker 3: Vice President Barat Jugdeo. One man in particular, mister Sue,
[10:25] Speaker 3: claimed to have handled a deal between the oil company
[10:29] Speaker 3: and Jack Dao. He took the undercover journalist to see
[10:32] Speaker 3: the Vice president at his home as a way to
[10:34] Speaker 3: show them that he did have this close relationship with him.
[10:39] Speaker 3: Jagdeo never spoke of bribes, but he did say that
[10:43] Speaker 3: he was good friends with mister Sue and could help
[10:45] Speaker 3: their project from the government side.
[10:48] Speaker 5: Can you understand how with Theo in detail, I'm.
[10:51] Speaker 12: Not getting involved business, you will get his support.
[10:55] Speaker 14: Sus my friend he at all his soon beans, with
[10:59] Speaker 14: all it raiment.
[11:00] Speaker 3: I don't, I don't I understand. I understand.
[11:03] Speaker 10: The thing is that my thing is invoment. So you
[11:09] Speaker 10: can either assist from.
[11:11] Speaker 3: Goloments after that story came out, Jagdeo's sued mister Sue
[11:17] Speaker 3: for defamation in Guyana. He claimed fifty million dollars in
[11:21] Speaker 3: damages and he seems to have stopped talking to foreign
[11:25] Speaker 3: journalists altogether, at least for a while. A lot of
[11:28] Speaker 3: people look at the contract situation in Guyana and think
[11:32] Speaker 3: it must be corruption. In fact, Jagdeo himself accused the
[11:36] Speaker 3: previous government, the one that actually signed this contract, of corruption.
[11:42] Speaker 3: Now those accusations are flying at him too, after being
[11:47] Speaker 3: a vocal critic of the contract for years and promising
[11:50] Speaker 3: to renegotiate it when his government resumed power. Now Jagdeo
[11:54] Speaker 3: says renegotiation is not an option. He often repeats a
[11:58] Speaker 3: phrase that Exon has used over and over, Santa Kiyev contract,
[12:03] Speaker 3: Santa Ti of contract, sanctity of contract. Contract renegotiation has
[12:09] Speaker 3: become a big issue in Guyana. Government officials are still
[12:14] Speaker 3: answering questions about it years later, and Glenlaw is turning
[12:18] Speaker 3: out hundreds of hours of video on the topic. To
[12:21] Speaker 3: understand why, we're going to have to get into some
[12:24] Speaker 3: of the details and spoiler alert, they are confusing as
[12:28] Speaker 3: hell to recap. Guyana signed a contract with Exon Mobile
[12:35] Speaker 3: in nineteen ninety nine, allowing them to explore for oil,
[12:39] Speaker 3: but Exon didn't really start exploring there until about a
[12:43] Speaker 3: decade later, and then in twenty fifteen they struck oil,
[12:48] Speaker 3: and a year later, in twenty sixteen, they inked a
[12:51] Speaker 3: new contract with the government of Guyana. According to Exon,
[12:56] Speaker 3: even though they had found oil, no one knew the
[12:59] Speaker 3: full potential of Guyana's reserves at the time, but none
[13:03] Speaker 3: of that was made public until December twenty seventeen, when
[13:07] Speaker 3: Exeon held a press conference to explain the contract to
[13:12] Speaker 3: journalists like Keana Wilberg.
[13:15] Speaker 9: It's clear that they weren't exactly telling us lies, but
[13:18] Speaker 9: they weren't telling us the truth.
[13:19] Speaker 3: Eider. This practice using statements that are technically true but
[13:25] Speaker 3: also leave out critical information in order to mislead people.
[13:29] Speaker 3: It has a name paltering, and the fossil fuel industry
[13:32] Speaker 3: uses it over and over again. John Cook is a
[13:36] Speaker 3: climate communications researcher at Monash University in Australia and an
[13:40] Speaker 3: advisor to Facebook on climate misinformation. He says paltering is
[13:44] Speaker 3: a key tactic for the industry. He often points to
[13:48] Speaker 3: the way fossil fuel companies talk about renewable energy as
[13:51] Speaker 3: a text book example, the.
[13:54] Speaker 7: Sun doesn't shine at night or the wind doesn't always fly,
[13:59] Speaker 7: and therefore or renewables on a reliable source of energy.
[14:03] Speaker 3: Of course, it's true that the wind doesn't always blow
[14:06] Speaker 3: and that the sun doesn't shine at night, but this
[14:09] Speaker 3: argument intentionally leaves out information about things like battery storage
[14:14] Speaker 3: that address those issues. Exceon Mobile does the same thing
[14:20] Speaker 3: in Guyana. In fact, the company uses a handful of
[14:23] Speaker 3: classic disinformation tactics all the time, not just pultering, but
[14:28] Speaker 3: also implying that any information not released by the company
[14:32] Speaker 3: itself is inaccurate and something called building social license things
[14:38] Speaker 3: like sponsoring sporting events or educational programs to convince the
[14:42] Speaker 3: public that the company is a positive member of the community.
[14:46] Speaker 3: These three tactics have been deployed over and over again
[14:49] Speaker 3: in Guyana, not just at that initial press conference, but
[14:52] Speaker 3: in a steady stream of marketing materials the company has
[14:55] Speaker 3: released since then, like this promotional video they put out
[14:59] Speaker 3: on Facebook to explain the contract to the Guyanese public.
[15:04] Speaker 4: I'm Janelle Persad and I'm Mikaela Careron. So while development
[15:07] Speaker 4: activities continue to progress at a rapid pace. There are
[15:11] Speaker 4: still many of you out there who have questions, questions
[15:14] Speaker 4: specifically about the production sharing agreement or the contract which
[15:18] Speaker 4: was signed in twenty sixteen. And if you guys hadn't heard,
[15:21] Speaker 4: Exon Mobil will once again be sponsoring the Guyana Amazon
[15:24] Speaker 4: Warriors Cricket Cricket Lovely Titanti Cricket returns to Guyana.
[15:29] Speaker 11: We could not be more excited.
[15:31] Speaker 13: And that's why we're recording this episode from the Guyana
[15:34] Speaker 13: National Stadium in Providence.
[15:36] Speaker 3: That's not us editing the tape, that's the video as
[15:39] Speaker 3: is going straight from oil to cricket without missing a beat.
[15:43] Speaker 3: This is one of the ways Exon is building social
[15:46] Speaker 3: license by associating cricket, Guyana's beloved national sport with Exon.
[15:52] Speaker 3: These two young women, one of African descent the other
[15:55] Speaker 3: of Indian descent, who appeal to as much of the
[15:58] Speaker 3: Guyanese public as possible, all are filming from the national
[16:02] Speaker 3: cricket field and highlighting Exxon's contributions to Guyanese society. I
[16:09] Speaker 3: asked Glen Law, the publisher of Kitter News we heard
[16:13] Speaker 3: from up top, what he thinks of the cricket sponsorship.
[16:17] Speaker 15: I am so afraid, deep with in my soul, with
[16:22] Speaker 15: what they're doing there. That is not only misleading, but
[16:28] Speaker 15: it's very dangerous. I have said that on team times
[16:32] Speaker 15: and I will repeat it tomorrow night on the radio.
[16:35] Speaker 15: You see when they sponsor this cricket before I think
[16:40] Speaker 15: two years ago, their sponsor cricket, and when you walk
[16:43] Speaker 15: in the streets, you would hear every guy and saying
[16:46] Speaker 15: doubt God for Eggson. It wasn't for Eggxon, we would
[16:51] Speaker 15: have never been able to see cricket live on television.
[16:56] Speaker 15: You see how dangerous that it.
[17:00] Speaker 3: Oil companies, like all big industrial companies, work really hard
[17:05] Speaker 3: to convince the public that they're doing more good than harm.
[17:08] Speaker 3: They spend a lot of time and money on it.
[17:11] Speaker 3: Social license. The public's willingness to give them the benefit
[17:14] Speaker 3: of the doubt or support policies that the oil companies
[17:17] Speaker 3: want is important to their business model. So when they
[17:21] Speaker 3: do things like sponsoring sports teams and music festivals and schools,
[17:26] Speaker 3: they're not just playing the good guy. They're not just
[17:29] Speaker 3: doing it for pr They're also making entire communities dependent
[17:34] Speaker 3: on their apparent generosity. Over time, it makes people less
[17:38] Speaker 3: likely to criticize them. Because they feel totally beholden to them.
[17:44] Speaker 3: Remember how the Exon promotional video promised to answer all
[17:47] Speaker 3: of our questions about the contract well before getting into
[17:50] Speaker 3: any of the actual details that they've promised. First they
[17:53] Speaker 3: remind us that Exon is supporting cricket in a big way,
[17:56] Speaker 3: and then they raise an eyebrow at what anyone else
[17:59] Speaker 3: might be saying about this contract.
[18:02] Speaker 13: Well, recognizing that there is a lot of incorrect information
[18:06] Speaker 13: out there, we hope to provide clarity through our conversations
[18:09] Speaker 13: with president of ix On Mobile Guyana, Alistair Routledge and
[18:13] Speaker 13: our treasurer at Katrina Masses in this episode of Access
[18:16] Speaker 13: Exon Mobile.
[18:17] Speaker 3: And finally we get to the poultering. Here's Alistair Routledge,
[18:20] Speaker 3: who heads up Exon's operations in Guyana.
[18:23] Speaker 7: So fundamentally, this is a sharing production sharing agreement.
[18:29] Speaker 3: This is the guy in charge of Exon in Guyana,
[18:31] Speaker 3: Alistair Routledge.
[18:33] Speaker 7: But in that sharing agreement, the contractors, which is Exomobile,
[18:37] Speaker 7: Hes and Snook, take all of the risk up front.
[18:41] Speaker 7: So if we never made an economic development, we would
[18:45] Speaker 7: swallow all of the costs that went into that investment.
[18:49] Speaker 7: We would never get paid back. So there's never any
[18:52] Speaker 7: risk for the state.
[18:54] Speaker 3: What Routledge is seeing is that Exon and its partners
[18:57] Speaker 3: are investing money into the discovery and puduction of oil,
[19:01] Speaker 3: and that's expensive. These are things like surveying the ocean
[19:04] Speaker 3: floor to figure out where oil is and then drilling
[19:07] Speaker 3: exploratory wells to see what kind of oil they can
[19:10] Speaker 3: get there. And in Guyana they can get what's called
[19:13] Speaker 3: light sweet crude, the best kind of oil. It's easier
[19:18] Speaker 3: to turn into gasoline and it commands a higher price
[19:21] Speaker 3: on the world market. So in Guyana they not only
[19:25] Speaker 3: found oil, they found a lot of the most profitable kind.
[19:29] Speaker 3: But then there are more expenses before that oil can
[19:32] Speaker 3: be sold. Wales need to be built, staff hired, the
[19:35] Speaker 3: oil needs to be refined and shipped. All of it
[19:39] Speaker 3: costs billions and billions of dollars. Here's ex On Guyana's
[19:42] Speaker 3: Vice president and business service manager, Philip Reyatima, explaining it
[19:47] Speaker 3: all at a press conference.
[19:49] Speaker 10: This is the first year since our inception in nineteen
[19:53] Speaker 10: ninety nine that we've generated profit in Guyana, underscoring the
[19:57] Speaker 10: complexity of our business and the years of investment required
[20:01] Speaker 10: before payoff overall expenses. We're up from twenty twenty in
[20:08] Speaker 10: line with increase in production.
[20:11] Speaker 3: In other words, deep water offshore drilling projects take a
[20:14] Speaker 3: lot of time and a lot of money before they
[20:16] Speaker 3: start to pay off, and before anyone can start divvying
[20:20] Speaker 3: up profits. The oil companies need to pay themselves back
[20:23] Speaker 3: for all those years of investment. It's only fair. But
[20:27] Speaker 3: there are a couple of things to keep in mind here. First. Well, yes,
[20:31] Speaker 3: Exxon has technically been in Guyana since nineteen ninety nine,
[20:36] Speaker 3: it only started actively looking for oil in two thousand
[20:39] Speaker 3: and eight, and Exon spokespeople leave out some other key
[20:43] Speaker 3: details that make things a whole lot more blurry. Here's
[20:48] Speaker 3: what you need to know first, before there's any profit
[20:52] Speaker 3: to split. Exeon and its partners takes seventy five percent
[20:55] Speaker 3: of all revenue off the top to pay themselves back
[20:59] Speaker 3: for exploration and development costs, all those things that Routledge
[21:02] Speaker 3: was talking about. So if you think about one hundred
[21:05] Speaker 3: dollars barrel of oil, that's seventy five dollars to the
[21:08] Speaker 3: oil company's straightaway. It's what the oil companies referred to
[21:12] Speaker 3: as cost oil. The remaining twenty five dollars or profit
[21:17] Speaker 3: oil gets split between Guyana and the oil companies with
[21:22] Speaker 3: an extra two percent royalty coming to Guyana for a
[21:26] Speaker 3: grand total of fourteen dollars and fifty cents a barrel.
[21:30] Speaker 14: It may be ultimately over a long period of time
[21:33] Speaker 14: of fifty to fifty split. Right now, it is not
[21:35] Speaker 14: a fifty to fifty split right now, it's six to one.
[21:38] Speaker 3: This is Tomsonzilo from the nonprofit Institute for Energy Economics
[21:43] Speaker 3: and Financial Analysis. He's looked at Guyana's oil contract closer
[21:47] Speaker 3: than almost anybody.
[21:49] Speaker 14: Right now, you're looking at a revenue take of somewhere
[21:52] Speaker 14: between six dollars to the oil and gas companies to
[21:56] Speaker 14: every one dollar to the government of Guyana.
[22:00] Speaker 3: And just to put that royalty in perspective, that two
[22:03] Speaker 3: percent that gets talked about as this like big extra
[22:07] Speaker 3: tip for Guyana. The average range for royalties in situations
[22:12] Speaker 3: like this is eight to twenty five percent, So two
[22:18] Speaker 3: percent is quite a bit below the low end of
[22:21] Speaker 3: that spectrum. It's not great. Plus, Guana's on the hook
[22:26] Speaker 3: for a lot of other costs. It pays Exon's Guyanese
[22:30] Speaker 3: income tax, for example, and it's had to get foreign
[22:34] Speaker 3: loans to cover the cost of various infrastructure projects that
[22:38] Speaker 3: need to be built to support the fossil fuel industry,
[22:41] Speaker 3: like the export terminal in Georgetown that Exon needs to
[22:45] Speaker 3: ship things in and out of. Second, you could look
[22:49] Speaker 3: at the current split and say, okay, well, sure, but
[22:52] Speaker 3: expenses are expenses, and once they're paid off, it will
[22:55] Speaker 3: be fifty to fifty And again that's technically true, but
[22:58] Speaker 3: as you heard from Ryet a moment ago, those expenses
[23:01] Speaker 3: just keep growing. Here's where it starts to get really tricky.
[23:05] Speaker 3: It's pretty normal for an oil company to recoup at
[23:08] Speaker 3: least some of its development costs once a well starts
[23:12] Speaker 3: generating revenue. What's not common is for them to build
[23:16] Speaker 3: against what's called future oil, the oil that future well
[23:20] Speaker 3: sites are projected to produce.
[23:24] Speaker 14: All of Exxon's development costs are folded in as a
[23:29] Speaker 14: part of the balance that's owed. They've developed a couple
[23:33] Speaker 14: of existing wells where they're actually drawing oil, and that
[23:38] Speaker 14: oil is producing revenue, and so they're getting money for that.
[23:41] Speaker 14: But they now have also some twenty plus other fields
[23:45] Speaker 14: that they have discovered that are not producing oil without
[23:50] Speaker 14: the development costs get folded into the balance anyway. In
[23:53] Speaker 14: other words, they're paying for future oil now.
[23:58] Speaker 3: So Exon has two wells that are producing actual barrels
[24:01] Speaker 3: of oil for sale. That's where all the profit is
[24:04] Speaker 3: coming from right now. But on top of covering the
[24:07] Speaker 3: expenses associated with those wells, they're recouping the expenses associated
[24:12] Speaker 3: with all of their ongoing exploration and development in Guyana.
[24:17] Speaker 3: See Excellon didn't stop exploring once they found that initial
[24:20] Speaker 3: bit of oil. They've continued to survey and drill to
[24:23] Speaker 3: look for more oil, and they're continuing to build new
[24:26] Speaker 3: wells and production rigs too. All of that costs money,
[24:30] Speaker 3: and normally those costs would be recouped once those new
[24:33] Speaker 3: discoveries start producing sellable barrels of oil. But instead of
[24:38] Speaker 3: waiting for that, Excellent and its partners are paying themselves
[24:41] Speaker 3: back now with the profits from those first two wells.
[24:45] Speaker 3: In other words, Guyana is paying today for well sites
[24:49] Speaker 3: that may never turn a profit, and that's not generally
[24:53] Speaker 3: how these projects work. Here's how investigative journalist Antonia Yuha
[25:00] Speaker 3: Let's put it.
[25:02] Speaker 11: It is unprecedented that Exxon is recouping all of its costs,
[25:10] Speaker 11: all of its development costs, that the Guyanese people are
[25:13] Speaker 11: subsidizing all of the development costs for Exon.
[25:17] Speaker 3: Like Senzilo, Juhas, has read a lot of oil contracts.
[25:21] Speaker 3: She's been digging into Guyana situation since twenty nineteen and
[25:25] Speaker 3: has written about it for The Guardian and Wired, and
[25:28] Speaker 3: she's written books on the way the oil industry operates
[25:32] Speaker 3: in the Gulf of Mexico and also any rock in Guyana.
[25:36] Speaker 3: You've got these two big issues. Seventy five percent of
[25:39] Speaker 3: revenue comes off the top of every barrel to cover expenses,
[25:44] Speaker 3: and Exon is front loading those expenses, which means Guyana
[25:49] Speaker 3: is paying today for wells that may or may not
[25:51] Speaker 3: pay off tomorrow. So far, those expenses are estimated at
[25:55] Speaker 3: up to twenty nine billion dollars, which could take up
[25:59] Speaker 3: to ten years to pay off. But to really understand
[26:04] Speaker 3: the problem with this setup, you kind of have to
[26:06] Speaker 3: understand the global oil market a bit too. It is,
[26:10] Speaker 3: in a word, volatile. The past year has been very,
[26:14] Speaker 3: very good to the industry, thanks in large part to
[26:17] Speaker 3: Russia's invasion of Ukraine. Oil has fluctuated between eighty and
[26:22] Speaker 3: one hundred and thirty nine dollars a barrel, and oil
[26:25] Speaker 3: companies have been pocketing record profits. But for years before that,
[26:29] Speaker 3: oil prices were pretty regularly hitting record lows. Fifty dollars
[26:35] Speaker 3: a barrel seemed kind of like the new normal. And
[26:37] Speaker 3: then remember at the height of the COVID nineteen pandemic
[26:41] Speaker 3: in twenty twenty, oil prices actually went negative. In other words,
[26:46] Speaker 3: to sell a barrel of oil, you would have to
[26:50] Speaker 3: pay the person you are selling that barrel to money.
[26:54] Speaker 3: That's because demand plummeted, but companies kept right on producing
[26:59] Speaker 3: the same amount and there was nowhere to put it.
[27:02] Speaker 3: There was no storage left. At one point, anyone selling
[27:05] Speaker 3: a barrel of oil was having to pay the buyer
[27:08] Speaker 3: thirty dollars.
[27:10] Speaker 12: Oil prices have turned negative. The most extraordinary development that
[27:15] Speaker 12: took place today when the US main blend West Texas
[27:20] Speaker 12: Intermediate fell more than three hundred and six percent.
[27:23] Speaker 3: Shutting down wells can be expensive and complicated, and then
[27:27] Speaker 3: there's the risk that you won't be able to get
[27:29] Speaker 3: them back up and running again when prices rise. So
[27:32] Speaker 3: some oil companies just keep pumping even if they're losing money.
[27:37] Speaker 3: Not exactly a rock solid investment. In fact, most forecasters
[27:41] Speaker 3: predict prices will go down as the decade progresses, in
[27:45] Speaker 3: part due to slowing demand as people and countries transition
[27:48] Speaker 3: away from fossil fuels. So by the time those wells
[27:53] Speaker 3: Guana is paying for today actually start to turn a profit,
[27:56] Speaker 3: and by the time those profits are truly being split
[27:59] Speaker 3: fit fifty, things are likely to look very different than
[28:03] Speaker 3: they do today. That's why Glenn Mall is taking to
[28:08] Speaker 3: TikTok every chance he gets to beat the drum for
[28:11] Speaker 3: renegotiating the contract.
[28:14] Speaker 1: Now tell me again.
[28:17] Speaker 2: How or not that is a fifty to fifty profit
[28:20] Speaker 2: sharing business. Huh when one side is huffing out trick
[28:27] Speaker 2: quarter barrel up front, I'm calling it cost oil. Guyana
[28:35] Speaker 2: cannot say definitively to this country what percentage of revenue
[28:41] Speaker 2: the Guyanese people are receiving from our oil deal.
[28:46] Speaker 1: The contract was not made freely, knowingly and fairly by
[28:50] Speaker 1: compretent people. And our hands are not handcuffed. We are
[28:56] Speaker 1: not chained to a concrete posts. So what is stopping
[28:59] Speaker 1: us from changing it?
[29:02] Speaker 3: Calls to renegotiate the contract have gotten enough support that
[29:06] Speaker 3: Exon is starting to spend some of its marketing budget
[29:09] Speaker 3: to counteract the idea that Guyana has a bad deal.
[29:13] Speaker 3: It made that promotional video I mentioned earlier, for example,
[29:17] Speaker 3: and it's been putting up massive billboards all over Guyana
[29:20] Speaker 3: about the fifty to fifty split, But not everyone agrees
[29:24] Speaker 3: with law about the need to renegotiate. Some people say
[29:27] Speaker 3: he's just mad that he's not getting rich off the oil.
[29:30] Speaker 3: Others buy Exon's argument that it's only fair for the
[29:33] Speaker 3: company to recoup its costs in this way. But another
[29:38] Speaker 3: small but growing group of people thinks haggling over the
[29:42] Speaker 3: details of the contract is a fool's errand that Guyana
[29:46] Speaker 3: needs to look past the contract, past the promises of
[29:49] Speaker 3: oil riches, and really grapple with the harm that this
[29:53] Speaker 3: project could do in Guyana, and beyond the fact that
[30:00] Speaker 3: there are all these expenses to pay up front and
[30:02] Speaker 3: that it could be a long time before a true
[30:04] Speaker 3: fifty to fifty split kicks in. Creates a huge incentive
[30:09] Speaker 3: for Guyana to fast track oil production. The more barrels
[30:14] Speaker 3: they can produce, and the faster they can produce them,
[30:17] Speaker 3: the faster they can pay off those expenses and get
[30:19] Speaker 3: to that oil wealth that the public has been promised,
[30:22] Speaker 3: and fast treking appears to be exactly what they're doing.
[30:26] Speaker 3: Routledge himself regularly comments on how everything in Guyana is
[30:30] Speaker 3: happening ahead of schedule at an unprecedented pace.
[30:35] Speaker 7: Really just six years, less than six years that we've
[30:38] Speaker 7: been exploring offshore Guyana to achieve that amound is quite outstanding.
[30:43] Speaker 3: Well excellent.
[30:44] Speaker 11: Just repeats every chance it gets that everything about this
[30:48] Speaker 11: production has been ahead of schedule and way faster than
[30:53] Speaker 11: its other operations. It says this as a point of pride.
[30:56] Speaker 3: That's investigative journalist Antonia Juhas.
[30:59] Speaker 11: Again, this is a point of concern that why is
[31:03] Speaker 11: it so much faster than everywhere else. Exon has been
[31:06] Speaker 11: producing oil over one hundred and fifty years. Why is
[31:08] Speaker 11: it suddenly you receive this ability to move so much
[31:11] Speaker 11: faster in Guyana than it does everywhere else in the world.
[31:14] Speaker 11: And the answer is really simple. There's no oversight, there's
[31:20] Speaker 11: no one telling them to slow down, be careful, follow
[31:22] Speaker 11: the rules. It's one of the reasons why it's so
[31:24] Speaker 11: cheap for Exon to produce there, and it's why Exon
[31:28] Speaker 11: is pushing so much of its production there.
[31:32] Speaker 3: At the end of twenty twenty two, Exon announced that
[31:35] Speaker 3: its first two wells in Guyana we're producing above design capacity,
[31:40] Speaker 3: so pumping out more barrels than they were designed to produce.
[31:44] Speaker 3: If it stays on its current production schedule, Guyana will
[31:48] Speaker 3: be neck and neck with Exon's longtime stronghold, the Permium
[31:52] Speaker 3: Basin in Texas within five years.
[31:55] Speaker 11: That is a shocking development for a country that didn't
[32:00] Speaker 11: have any oil production three years ago.
[32:04] Speaker 3: It's actually another example of paltering too. Exon boasts to
[32:08] Speaker 3: its shareholders and the public about the remarkable speed with
[32:12] Speaker 3: which it is developing an oil industry in Guyana, but
[32:16] Speaker 3: in reality, that speed is a major red flag because
[32:19] Speaker 3: while it's true that rapidly increasing production can increase profits
[32:23] Speaker 3: in the short term, there's another thing that's even more
[32:27] Speaker 3: common when oil companies fast track things.
[32:31] Speaker 16: The gusher unleashed in the Gulf of Mexico continues to
[32:34] Speaker 16: spew crude oil. There are no reliable estimates of how
[32:38] Speaker 16: much oil is pouring into the gulf, but it comes
[32:40] Speaker 16: to many millions of gallons. Since the catastrophic blew out in.
[32:45] Speaker 11: The US golf, you did have one hundred and fifty
[32:47] Speaker 11: years of experience, you do have some of the best
[32:51] Speaker 11: regulations in the world, and though limited, you do still
[32:55] Speaker 11: have some of the best oversight capacity in the world. Again,
[32:58] Speaker 11: though limited and still the worst offshore drilling oil disaster
[33:04] Speaker 11: in history took place in the US Gulf of Mexico
[33:07] Speaker 11: under these circumstances, and there is tremendous concern both by
[33:13] Speaker 11: experts and by everybody I talked to in Guyana about
[33:18] Speaker 11: what would happen if there was a disaster in the
[33:22] Speaker 11: deep waters offshore Guyana.
[33:26] Speaker 3: That's our story next time. Late Sweet Crude is a
[33:32] Speaker 3: Drilled and Damage's co production. Both shows are Critical Frequency originals.
[33:38] Speaker 3: Our editor and senior producer is Sarah Ventry. Sound design,
[33:42] Speaker 3: mixing and mastering by Martin Saltz Austwick, Our fact checker
[33:46] Speaker 3: is Anna Prugel Mazzini, and our first amendment attorney is
[33:50] Speaker 3: James Wheaton. The show is reported and written by me
[33:53] Speaker 3: Amy Westerveldt, additional reporting by Keana Wilberg in Guyana and
[33:57] Speaker 3: Antonio Juhas in DC. We had additional assistance in Guyana
[34:02] Speaker 3: from Jamal Thomas Salvadorda, Carrie's Wilderness Explorers, and the staff
[34:06] Speaker 3: at Kaiman House. Special thanks to Michael McCrystal for his
[34:11] Speaker 3: help as well. Our theme song is Bird in the
[34:14] Speaker 3: Hand by Foreknown. The cover of The Godfather Love theme
[34:18] Speaker 3: is by Young Ones of Guyana and licensed from bb Music.
[34:23] Speaker 3: Sing a Simple Song was originally written by Sly and
[34:27] Speaker 3: the Family Stone. It's performed in this episode by the
[34:30] Speaker 3: Young Ones of Guyana, licensed by b a ME Music.
[34:34] Speaker 3: Our artwork is by Matt Fleming. Marketing is handled by
[34:38] Speaker 3: the Great Maggie Taylor PR and media outreach by the
[34:42] Speaker 3: wonderful folks at Tink Media Lauren Passel, Ariel Nissenblatt and
[34:46] Speaker 3: Devin Andrade. The show is supported in part by generous
[34:50] Speaker 3: grants from the Doc Society File Foundation, the William Collins
[34:55] Speaker 3: Kohler Foundation, and you

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