See full statement below
The Government of Guyana wishes to address the erroneous and misleading lead story in the September 22, 2024 edition of Kaieteur News, headlined ‘Guyana poised to receive less than US$9B of US$70B from Liza 1 and Liza 2’.
In this article, the newspaper’s publisher, Glenn Lall, attempts to project the gross revenue Guyana will receive from crude oil production over the life of the Liza 1 and 2 projects. This newspaper has demonstrated factual and methodical inaccuracies, which reflect a lack of understanding of basic economic principles by Lall, who has now announced his candidacy for president.
The first major issue lies in Kaieteur News’ use of incorrect break-even prices for the Liza 1 and Liza 2 projects. In July, ExxonMobil Guyana’s Vice President, Phillip Rietema, stated that the company’s operations are secure at a US$40 per barrel break-even price. The break-even price is the minimum price at which the crude needs to be sold, to cover all the costs of producing it. Kaieteur News erroneously calls this ‘production costs’, which is not the same. The US$40 per barrel figure is an average break-even price that applies to several developments offshore, not specifically to Liza 1 and Liza 2. The correct break-even costs for these projects are US$35 per barrel for Liza 1 and US$25 per barrel for Liza 2. Kaieteur News itself had previously reported these figures but conveniently ignored them in its recent article, using the higher US$40 per barrel to support its biased narrative. This deliberate manipulation skews the calculations, reducing Guyana’s projected gross revenue from these projects.
Additionally, after applying the break-even price, Kaieteur News goes on to subtract further costs such as decommissioning and development expenses, which reflects a fundamental misunderstanding of what a break-even price represents. A break-even price already factors in capital, operating, and other necessary expenses. Subtracting these costs again after factoring in the break-even price is redundant and incorrect. This approach further distorts the results to align with the newspaper’s biased argument.
It is concerning that Lall, who evidently does not understand such basic economic concepts, aspires to lead this country. We suggest that Lall consults qualified individuals before publishing his inaccurate calculations. As a word of advice: leave the math to the mathematicians, and the economy to the economists. The people of Guyana deserve better than misinformed sensationalism.
The People’s Progressive Party (PPP/C) continues to use all the tools at its disposal to maximize the revenue to the people of Guyana, through amendments to the law and continuous improvements of its regulatory capabilities.
