‘We can’t eat a new road’: Fears over the true cost of Exxon’s oil bonanza in Guyana
This story was originally published by The Guardian and is reproduced here as part of the Climate Desk collaboration.
Anette Arjoon is not anti-oil. The marine conservationist calls the vast new oil fields off Guyana’s coast a “blessing” that will earn billions of dollars for one of the poorest countries in the Caribbean, even as she recognizes that pulling yet more fossil fuel from the ground will deepen the climate crisis.
But Arjoon does have a problem with who is drilling the oil. She has seen firsthand what happens when the United States’ largest petroleum company descends on a small country bearing the promise of riches.
As ExxonMobil began drilling a vast oilfield offshore two years ago, the Guyanese government called in the Amerindian marine conservationist to help monitor the environmental impact of what is expected to become the company’s biggest source of petroleum by 2025, outpacing even its wells sprawled across Texas.
Arjoon, who leads the Guyana Marine Conservation Society, was not impressed. In time she grew to believe that Exxon was indifferent to the dangers of an oil spill to the coast and rivers of one of the best preserved parts of the Amazon biome, and of misleading her about its preparations to deal with such a disaster. She found the company’s behavior “thuggish and disrespectful.”
“I can only judge Exxon by my direct and deeply personal relationship with them so far. They are not an honorable company,” Arjoon says.
Suspicion about the oil firm does not stop with environmentalists. Guyanese politicians have accused Exxon of fleecing the country of billions of dollars by bouncing an ill-experienced government into a contract that pays far less than other countries earn from their oil.
Then there is the pressing question of the future of the planet. With Guyana increasingly threatened by rising sea levels, Arjoon is conscious of the impact of Exxon opening a huge oilfield at a time when governments are being warned there can be no new oil or gas fields or coal mines if the world is to reach net zero by 2050.
Liza-1 project, in the prolific Greater Liza area, was the first stage to begin production, with Liza-2 coming on line this year. The Greater Turbot discovery was announced in 2017, but is still not yet in production. Both areas are identified in research to be published this month into the world’s biggest so-called carbon bombs – gigantic fossil fuel projects that would each result in at least one billion tons of carbon dioxide emissions over their lifetimes. Together they would contribute more than 2.1 billion tons of CO2 emissions over the course of the project, according to the study, which identifies 195 similar oil and gas mega developments around the world. The Center for International Environmental Law has also warned Exxon’s drilling and gas flaring “may turn Guyana from carbon sink to carbon bomb.”
Yet for all that, Arjoon is glad to see the oil flowing because right now, she says, Guyana does not have any other way forward. “As an environmentalist with 35 years of experience in coastal communities through the length and breadth of Guyana, I see extreme poverty. Oil gives us a way out of that.”
This drilling bonanza promises to earn Guyana roughly $150 billion over the life of the oilfields, estimated at 30 years. For good or ill, that represents a huge change in fortune for a country of 800,000 people, where more than 40 percent live below the poverty line of $5.50 a day.
“All of those that have exploited their oil resources to develop their countries should not be telling Guyana ‘leave your oil in the ground’,” Arjoon says.
“Norway is always used as the best example of a nation that utilizes oil, and it is said that they have the best model for natural resources. So why should Guyana be any different? Who is to say that little Guyana, which has been blessed with so much abundant resources including oil, should not take advantage?”
Others agree. There is a bittersweet sense that Guyana needs to hurry and get the oil out of the ground if it does not want to miss the fossil fuel party.
After years of failed attempts, Exxon made one of the biggest offshore crude discoveries of recent times when it struck oil off Guyana’s coast in 2015. Four years later, the then president, David Granger, proclaimed a public holiday, National Petroleum Day, to celebrate the first oil flowing from its wells. “Guyana’s future is brighter with the beginning of first oil,” he said in a speech to the nation. “The good life for everyone beckons.”
The government promised to set up a sovereign wealth fund, similar to Norway’s, to transform the country with investments in roads, education, and hospitals. Fossil fuel money is also being earmarked to develop renewable energy sources such as solar and hydroelectric for when the oil runs out, an irony not lost on Arjoon and others. There has even been talk of a $5,000 cash handout to every citizen, a small fortune for many Guyanese.
Yet the hopes pinned on oil are tempered by Guyana’s divisive politics, shaped by tensions between the descendants of enslaved Africans and Indian indentured laborers, and concerns about official corruption.
For some Guyanese, their first encounters with Exxon have left them skeptical of the promises. A short drive east of the capital, Georgetown, George Jagmohan used to run seven fishing boats. He might be less angry about selling them off one by one since the oil drilling began if he believed in the declarations of a golden dawn for Guyana.
“Since the drilling started, the fish have gone. It’s the blasting and vibrations,” says Jagmohan, sitting on a sea wall next to a clutch of idle boats. “In another couple of years it will be finished. It never used to happen. People aren’t stupid. I’ve been fishing for 40 years and it’s not been like this before.”
A few miles further up the coast, Steve Outar says his catches are down by about 80 percent but he has not laid up any of his four boats because he feels a responsibility to the crews.
“The fish production in neighboring Suriname and Venezuela is still 100 percent, so why is it falling here? Because the vibrations are driving the fish and shrimp away. Some of my boats spend 18 days at sea but still don’t catch enough fish,” he says as he cleans red snapper ready for processing as dried fish for shipment to China.
“Each boat has a captain and six men. That’s 28 crew, and each of the crew has a family to support. If they don’t catch, they get nothing. If we’re out of business, they are out of bread.”
Arjoon says overfishing and other factors have played a part in the decline, but she agrees that “the massive seismics that were done in the early stages did have an impact on marine life, especially marine mammals. That was when you had an unprecedented amount of strandings of sperm whales.”
But she says that when she tried to talk to Exxon about the timings of seismic explosions, to see if they coincided with the stranding of whales, she was fobbed off.
And, like others, Arjoon fears not enough has been done in case of a spill that could devastate this coast. “Exxon’s modeling showed an unmitigated spill could impact the north-western part of the Shell beach protected area all the way to the Orinoco delta. What lies in between is a very special place, especially because that is where the largest national repository of blue carbon exists, at a time when our low-carbon development strategy has been expanded,” she says.
The government says there is no evidence Exxon is responsible for reduced catches and notes that Guyana’s overall fish production has increased by more than 10 percent from 2020, and exports for the fisheries sector have surpassed $4 billion Guyanese dollars. And Exxon said its “first priority for every project is to put in place mitigations and processes that help to prevent adverse events by utilizing the best technologies, equipment and people in our operations.”
“The Bank of Guyana summarizes landing quantities in their annual reports on Guyana’s sector economies; according to the data provided in those reports, fluctuations in the quantity of finfish and shrimp landings have been observed for many years. Oil and gas activities have not been included as potential factors.”
“We work diligently to avoid any spills. But should one occur, we are prepared to mitigate and resolve it as quickly and comprehensively as possible,” the company states.
But Outar waves away officials’ claims, saying that is not the experience of local fishers. And he does not have much faith that the promises made for oil will make up for the decline in fishing. “Oil isn’t going to help. It can make the country rich but the people won’t be better off. We’ve still got to live day to day. We can’t eat a new road,” he says.
Jahmohan is blunter. “Are you fucking crazy or what? It will all end up in the politicians’ pockets. They’ll be sitting there drinking champagne and whisky,” he says. “They told us oil will make us rich. We’ve got gold, diamonds, sugar in this country. We should be rich from that but we’re not. So why will oil be different?”
Those concerns are more widely shared. Frederick Collins, the head of the anti-corruption organization Transparency International Guyana, warned that oil “can end up being more of curse than a blessing.” He points to the behavior of big oil in the Niger delta, where millions of people live with flaring and spills but see few benefits.
Others look to the experience of Equatorial Guinea, which enjoyed an oil bonanza that in less than a decade transformed it from one of the world’s poorest countries to the highest per capita income in Africa by 2008. But Human Rights Watch describes Equatorial Guinea’s oil wealth as “squandered and stolen” by the government, resulting in declines in healthcare and access to education.
Vincent Adams, the former head of Guyana’s Environmental Protection Agency, says that should serve as a warning to Guyana as payments to its oil fund soar to nearly one billion dollars this year, permitting the government to increase its budget by 44 percent.
“It’s not about the oil, it’s about how you govern the country and how you govern the management of the oil industry. Oil is not going to be around for more than maybe 30 years. So the governance part of it is to make sure that we invest now so there will be a sustainable economy after oil is gone to attract foreign direct investment, to lay the groundwork in education, infrastructure, national security, health, agriculture,” he says.
“We are definitely not prepared for it. And the biggest frustration is that the government just does not understand what it takes to be prepared, and what it takes to govern under these circumstances to make the country a better country.”
Confidence has also been undercut by the widely held belief that Exxon bounced a government lacking in expertise and desperate for money into a contract that serves the country badly, with the global human rights group Global Witness estimating that Guyana will earn about $50 billion less than it would have done under a more common type of agreement.
A Guardian/Floodlight investigation last year found grave concern among experts about the contract signed by the Guyanese government. Adams said he warned the government against the contract but it was afraid Exxon would walk away.
The deal allows Exxon to deduct up to 75 percent of the earnings from its Guyanese wells as costs before the balance is split between the government and the company. It recently presented Guyana with a bill of more than $9 billion for those costs, which the government admits it does not have the resources to audit.
The offices of Guyana’s president and natural resources minister did not respond to requests for an interview.
According to Exxon, “the terms of the contracts are competitive with other agreements signed in countries at a similar resource-development phase.” It added: “Guyana’s resources have been brought on line at a record pace for the industry, resulting in significant financial benefits for the government and its industry partners.”
The project, after all, is steaming ahead. Guyana’s vice-president, Bharrat Jagdeo, played a leading role in developing a low-carbon strategy and protecting the rainforest but is pushing for as much oil as fast as possible, telling a recent conference: “Because there is this climate change imperative to decarbonise, our policy is to get as much oil out of the ground as quickly as possible. It sounds a bit harsh for those who think you should be environmentally sound, but that is the reality of it.”
Arjoon will be watching closely. She calls the gap between Exxon’s claims to prioritize environmental protection and the reality a “disgraceful deficit,” adding: “I am not unaware that Exxon is here to ensure the best returns to their shareholders.
“Exxon is not here because they care about Guyana. But that does not mean they can treat us as an uneducated nation. We don’t drink the Kool-Aid so easily.”