The Ministry of Natural Resources has responded to Kaieteur News, accusing the newspaper of publishing a misleading and factually incorrect article regarding Guyana’s projected oil revenue. The Ministry took issue with the lead story from the September 22, 2024 edition, titled *“Guyana poised to receive less than US$9B of US$70B from Liza 1 and Liza 2.”*
According to the Ministry, Kaieteur News’ publisher, Glenn Lall, who is also running for president, used erroneous figures in an attempt to calculate the gross revenue Guyana is expected to receive from the Liza 1 and Liza 2 oil projects. The government’s statement criticised Lall for misrepresenting key economic concepts, leading to inaccurate projections.
A key point of contention was Kaieteur News’ use of an incorrect break-even price for the Liza 1 and 2 projects. The Ministry noted that ExxonMobil Guyana’s Vice President, Phillip Rietema, had previously confirmed that the company’s operations were stable at an average break-even price of US$40 per barrel. However, this figure applies to several offshore developments, not specifically to Liza 1 and 2. The correct break-even prices for these two projects are US$35 per barrel for Liza 1 and US$25 per barrel for Liza 2, figures that Kaieteur News had previously reported but omitted in the recent article.
The Ministry accused the newspaper of deliberately using the higher US$40 figure to distort its revenue projections, thus reducing the expected gross revenue for Guyana from these projects. Furthermore, the Ministry highlighted that Kaieteur News incorrectly subtracted additional costs, such as decommissioning and development expenses, from the break-even price. The government explained that these costs are already factored into the break-even price, making further subtraction unnecessary and misleading.
In its official response, the Ministry questioned Lall’s understanding of economic principles, particularly given his bid for the presidency, and emphasized the need for responsible reporting. The government reiterated its commitment to maximizing revenue for the people of Guyana through ongoing legal and regulatory improvements.
The full statement from the Ministry is as follows:
“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 significant 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 production costs. Kaieteur News erroneously calls these ‘production costs,’ which are different.
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 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 subtracts 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 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 consult qualified individuals before publishing his inaccurate calculations. As a word of advice: leave math to mathematicians and economics to economists. The people of Guyana deserve better than misinformed sensationalism.
The People’s Progressive Party/Civic (PPP/C) continues to use all the tools at its disposal to maximise the revenue to the people of Guyana, through amendments to the law and continuous improvements of its regulatory capabilities.”
The government reiterated its dedication to maximizing oil revenues for Guyana’s benefit and urged a more responsible approach to discussing national economic issues.