Following the discovery of oil off the coast of Guyana, fossil fuel industry giants rushed to sign a contract with the government. The resulting “deal” is shockingly unjust and devastatingly reckless.
Fossil fuels have profoundly impacted the world in which we live today. Their proponents insist that without them, we cannot continue to enjoy the standard of living that wealthy countries have come to expect. But this misleading narrative fails to take into account that fossil fuels have had negative impacts as well. Greenhouse gas emissions from burning fossil fuels have already warmed our planet to record-breaking temperatures, caused glaciers and sea ice to melt at a blistering pace, created more intense natural disasters from stronger typhoons to increasing wildfires, driven many species to the brink of extinction, and devastated countless communities on the frontlines of the climate crisis.
Yet fossil fuel companies still perpetuate the myth that their products are necessary and will bring massive wealth. As a result, communities around the globe have suffered at the hands of the greed and corruption that permeates the fossil fuel industry. This time, it’s Guyana.
Guyana, a small country in the Caribbean region of South America, is home to breathtaking natural beauty, from the Atlantic Ocean along the northern coast, to towering mountains in the west, and the Amazon rainforest in the south. Nearly 85% of the country is covered by forests, and it is rich with biodiversity.
But for years, Guyana has struggled with stagnant economic development and slow growth. So when ExxonMobil announced that they had discovered oil, some in the media claimed the discovery would transform the country, making it a major oil exporter and potentially even “the richest country in the world.” Framed this way, the discovery seems like a God-send: a long-awaited opportunity for Guyana to shake the chains of underdevelopment. But the reality reveals a grim, more insidious truth.
Following the discovery of Guyanese oil, industry giants rushed to sign a contract with the government. The resulting “deal” is shockingly unjust, devastatingly reckless, and just rotten for the people of Guyana.
Enter A Fair Deal For Guyana: A Fair Deal For The Planet. Led by Ramon Gaskin, a Guyanese citizen and activist, and Melinda Janki, an environmental lawyer and native of Guyana, Fair Deal is challenging what they believe is an illegal deal that will jeopardize the future of the Guyanese people and the planet as a whole.
Building off what Transparency Institute Guyana calls “either grand corruption or grand incompetence,” Fair Deal argues that the agreement between Guyana’s government and the three oil companies threatens the future of the country and the planet. Four major themes underscore their case:
(1) The deal is illegal.
Following the discovery of oil, three companies, Esso (Exxon), Hess, and CNOOC Nexen, have obtained licenses to drill. But here’s the problem: the deal itself is illegal. The agreement violates Guyanese law, which requires that companies be approved for an environmental permit before being granted a petroleum production license. And though three separate companies have been granted petroleum production licences, only one was approved for an environmental permit.
In a recent decision (which came a year after the last arguments and far after the deadline for a decision), the Guyanese court sided with the oil companies, finding that the environmental permit granted to one oil company covered all three because it was for the “project.” Fair Deal remains clear that the law does not say a “project” can be the environmental permit applicant. In the days following this decision, Fair Deal filed an appeal.
(2) Oil Giants took advantage of Guyana.
And if this wasn’t enough, from the beginning, the negotiations between Guyana’s government and ExxonMobil, Hess, and Nexen, the three oil companies poised to begin drilling, have been rife with corruption. Before negotiations even began, the companies paid the Guyanese government $18 million through a secret account.
Then through negotiations, the oil companies managed to extract an impressively generous deal from the Guyanese government. It ensures that the oil companies themselves would pay no taxes in Guyana. Not a single cent. Plus, though they agreed to provide the Guyanese people with royalties from the oil sales, these are set at a mere 2%. And while the oil companies promise that there will be astronomical profits, the government has no say as to how these profits are calculated, meaning the companies have free reign to decide just how much revenue they are willing to surrender to the people of Guyana.
After everything was signed and sealed, the International Monetary Fund (IMF) criticized the deal, stating that ExxonMobil got highly “favorable” terms. In fact, the IMF was so concerned with the inequity of this deal that it recommended Guyana rewrite its entire tax code to close loopholes and increase revenue for its population. It also urged the government to ensure that future contracts permit the country to benefit more equitably from drilling.
(3) Oil drilling rarely yields the rags-to-riches miracle that corporations promise.
At a recent event, Janki spoke about the devastation caused by oil drilling everywhere it has occurred, but especially in developing countries that have similarly been promised similar economic growth and unimaginable wealth. “Name one [developing] country that was made better because of oil development,” she asked.
From Venezuela, which is home to 20% of the world’s oil reserves yet is in the midst of a downward spiral, massive hyperinflation, and devastating famine, to Libya, where the economy is based solely on the export of oil and a catastrophic civil war in 2011 has spelled dangerous political instability ever since, low-income nations that strike oil are made worse for it.
In addition to the political instability and corruption that has plagued developing countries cursed with vast oil reserves, drilling also poses the risk of disaster, including oil spills and other mechanical failures that can have devastating consequences on workers and communities, as well as wildlife and the surrounding environment. And these countries rarely have the resources to manage or clean up after these events, exponentially increasing the damage caused. (Let’s not forget that Exxon, which is currently drilling in Guyanese waters, is responsible for one of the biggest oil spills in history.)
And even without any incidents, normal drilling operations will cause 4,000 barrels of sewage to be poured into Guyanese waters every day.
If Guyanese waters are opened for drilling, the country’s rich biodiversity and fragile ecosystem will be threatened when incidents inevitably occur — there were 137 oil spills in the US alone in 2018 — and it will test the country’s already delicate political landscape.
(4) Building new fossil fuel infrastructure is irresponsible and will accelerate the climate crisis.
If we are to have any chance to keep global temperature rise below 1.5°C, we can ill afford new fossil fuel infrastructure. The science is abundantly clear, yet oil companies insist on continuing their reckless activity in a last-gasp attempt to save their flailing bottom line. Extracting and burning Guyana’s oil reserves will drastically spike emissions and accelerate the climate crisis at a time when what is needed is a just transition to a clean energy future. And it will turn Guyana from a carbon sink, which it currently is, into a carbon emitter.
This is a pivotal moment in Guyanese history that will impact the country — and the world — for decades to come. In the end, every decision to develop fossil fuels in the face of the ongoing climate crisis is a decision to jeopardize the future of the planet and all the people and animals living on it.
By Adele Shraiman, Communications Intern
Originally posted on February 21, 2020