1 00:00:03,520 --> 00:00:06,480 Speaker 1: It's the big take from Bloomberg News and I Heart Radio. 2 00:00:06,800 --> 00:00:12,200 Speaker 1: I'm West Kasova today. What happens when a small horror 3 00:00:12,200 --> 00:00:25,400 Speaker 1: country all of a sudden strikes it fantastically rich. That 4 00:00:25,560 --> 00:00:29,640 Speaker 1: country it's Guyana. If you're searching your mental map right now, 5 00:00:29,960 --> 00:00:33,120 Speaker 1: Guyana is right at the top of South America, next 6 00:00:33,159 --> 00:00:35,879 Speaker 1: door to Venezuela. One of the first things to know 7 00:00:35,920 --> 00:00:38,840 Speaker 1: about it is that it's very, very small. There are 8 00:00:38,880 --> 00:00:41,879 Speaker 1: only eight hundred thousand people in the whole country. That's 9 00:00:41,920 --> 00:00:45,440 Speaker 1: my colleague Monty Real. He's an investigative reporter for Bloomberg. 10 00:00:46,000 --> 00:00:50,160 Speaker 1: Monty recently spent time in Guyana. Until not too long ago, 11 00:00:50,440 --> 00:00:55,120 Speaker 1: its economy was mainly agriculture and mining, and the country's 12 00:00:55,160 --> 00:00:58,440 Speaker 1: gross domestic product, it's g d P, which is the 13 00:00:58,600 --> 00:01:02,880 Speaker 1: total of everything it produces, didn't amount too much. So 14 00:01:02,920 --> 00:01:05,840 Speaker 1: if you think about the gross domestic product, for example, 15 00:01:05,880 --> 00:01:08,600 Speaker 1: of Guyana, it hit one billion dollars for the first 16 00:01:08,640 --> 00:01:12,440 Speaker 1: time just within the last twenty years for the entire country. 17 00:01:12,680 --> 00:01:15,920 Speaker 1: For the entire country, and to put that in perspective, 18 00:01:16,440 --> 00:01:23,679 Speaker 1: that's about one tenth the size for economic output of Huntsville, Alabama. 19 00:01:24,120 --> 00:01:27,720 Speaker 1: And another thing, the place is under attack from climate change. 20 00:01:28,280 --> 00:01:32,920 Speaker 1: Most of Guyana's population is packed along the country's northern coastline, 21 00:01:33,360 --> 00:01:36,720 Speaker 1: and much of that land is actually below sea level. 22 00:01:37,520 --> 00:01:41,240 Speaker 1: So whenever you talk about Guyana and the populated areas 23 00:01:41,280 --> 00:01:47,800 Speaker 1: of Guyana, you're always talking about water. And when that 24 00:01:47,880 --> 00:01:51,600 Speaker 1: water rises up, and it does, the flooding can be 25 00:01:51,680 --> 00:01:56,960 Speaker 1: devastating and especially bad flood in two thousand five left 26 00:01:56,960 --> 00:02:01,760 Speaker 1: the capital, Georgetown under six ft of water and tanked 27 00:02:01,800 --> 00:02:05,480 Speaker 1: the economy. That one flood in two thousand five wiped 28 00:02:05,520 --> 00:02:11,400 Speaker 1: out of the annual GDP. The country needed to fortify 29 00:02:11,560 --> 00:02:14,320 Speaker 1: its sea walls and shore up it's aging dikes and 30 00:02:14,360 --> 00:02:18,079 Speaker 1: canals to keep the water at bay. It needed new 31 00:02:18,160 --> 00:02:21,560 Speaker 1: roads and houses. There was just no way to pay 32 00:02:21,600 --> 00:02:25,960 Speaker 1: for it. But then the country's luck took a dramatic 33 00:02:26,000 --> 00:02:33,360 Speaker 1: turn because in Guyana struck oil, billions and billions and 34 00:02:33,800 --> 00:02:39,680 Speaker 1: billions of barrels worth of oil money. Reel joins me 35 00:02:39,760 --> 00:02:43,680 Speaker 1: now to tell the story of what happened next. So 36 00:02:43,720 --> 00:02:49,240 Speaker 1: in ex On Mobile had been sending exploration crews in 37 00:02:49,280 --> 00:02:53,080 Speaker 1: the waters off of Guyana's coast looking for oil, and 38 00:02:53,240 --> 00:02:57,119 Speaker 1: they struck oil in and they found a lot of it. 39 00:02:57,120 --> 00:03:01,200 Speaker 1: It was a massive once in a generation find how 40 00:03:01,280 --> 00:03:03,960 Speaker 1: much oil did they find in there? We now know 41 00:03:04,160 --> 00:03:08,440 Speaker 1: that that oil fine was the largest in recent years. 42 00:03:09,200 --> 00:03:12,720 Speaker 1: In fact, if you look since the date of that 43 00:03:12,800 --> 00:03:16,480 Speaker 1: discovery in t and you look at all of the 44 00:03:16,520 --> 00:03:21,679 Speaker 1: oil discoveries in the world, that single discovery in Guyana 45 00:03:21,919 --> 00:03:24,520 Speaker 1: accounts for more than one third of all the oil 46 00:03:24,600 --> 00:03:28,480 Speaker 1: that's been discovered since. So it was just a massive 47 00:03:28,720 --> 00:03:34,080 Speaker 1: cash of oil that was tapped into. And right now 48 00:03:34,280 --> 00:03:39,400 Speaker 1: the proven reserves are usually estimated to be about twelve 49 00:03:39,800 --> 00:03:43,760 Speaker 1: billion barrels of oil, but analysts think that that could 50 00:03:43,800 --> 00:03:48,320 Speaker 1: double in the coming years because more test wells are 51 00:03:48,360 --> 00:03:51,800 Speaker 1: being dug and more oil is being discovered, and that 52 00:03:51,840 --> 00:03:55,360 Speaker 1: would put guy on as oil right in line with 53 00:03:55,840 --> 00:03:58,840 Speaker 1: the proven reserves of China. So you think of a 54 00:03:58,840 --> 00:04:02,600 Speaker 1: country like China, uh compared to Guyana. If you look 55 00:04:02,640 --> 00:04:05,280 Speaker 1: at the population of the two countries, for every person 56 00:04:05,320 --> 00:04:09,280 Speaker 1: in Guyana, there's one thousand, seven hundred and fifty people 57 00:04:09,320 --> 00:04:12,720 Speaker 1: in China. It would be an enormous find for any country, 58 00:04:12,760 --> 00:04:15,160 Speaker 1: but when you consider how small Guyana, this is just 59 00:04:15,720 --> 00:04:20,640 Speaker 1: completely transformational. So what happened when they discovered this, What 60 00:04:20,800 --> 00:04:28,560 Speaker 1: was the response of Guyana's government? Well, this windfall obviously 61 00:04:28,720 --> 00:04:32,200 Speaker 1: means billions and billions, possibly hundreds of billions of dollars 62 00:04:32,200 --> 00:04:36,160 Speaker 1: for Guyana. It's something that you know, realistically, they could 63 00:04:36,160 --> 00:04:39,159 Speaker 1: not just pass up. So they came up with a 64 00:04:39,200 --> 00:04:42,279 Speaker 1: plan actually and said, we're going to be a different 65 00:04:42,360 --> 00:04:45,960 Speaker 1: kind of oil producer. We're going to be an environmentally friendly, 66 00:04:46,080 --> 00:04:50,479 Speaker 1: environmentally sustainable oil producer. We're going to kind of chart 67 00:04:50,560 --> 00:04:54,480 Speaker 1: a new course in this field. And so what they 68 00:04:54,520 --> 00:04:57,800 Speaker 1: did was they came up with a plan to use 69 00:04:57,880 --> 00:05:02,520 Speaker 1: the oil revenue to try to build infrastructure that one 70 00:05:02,800 --> 00:05:06,120 Speaker 1: would mitigate the effects of climate change. For example, it 71 00:05:06,120 --> 00:05:09,279 Speaker 1: would reinforce the sea wall, it would you know, work 72 00:05:09,480 --> 00:05:14,279 Speaker 1: on upgrading the canals um so it would pay for 73 00:05:14,720 --> 00:05:18,400 Speaker 1: the damage that climate change was doing to Guyana. But 74 00:05:18,520 --> 00:05:23,360 Speaker 1: beyond that, they wanted to build quote unquote green infrastructure. 75 00:05:24,240 --> 00:05:28,560 Speaker 1: And the centerpiece of that was building an economy that 76 00:05:28,640 --> 00:05:33,359 Speaker 1: was powered by renewable energy. So they weren't actually going 77 00:05:33,400 --> 00:05:37,200 Speaker 1: to use the oil to power the country. They were 78 00:05:37,240 --> 00:05:41,280 Speaker 1: going to use the profits from all of that oil 79 00:05:41,600 --> 00:05:45,760 Speaker 1: to create sort of a green future exactly. They wanted 80 00:05:45,800 --> 00:05:49,640 Speaker 1: to diversify the economy and they wanted to build an 81 00:05:49,760 --> 00:05:55,440 Speaker 1: energy grid essentially that has powered by renewable energy, so 82 00:05:55,520 --> 00:06:00,240 Speaker 1: there are plans for hydro electric dams, for wind our, 83 00:06:00,560 --> 00:06:06,120 Speaker 1: for solar facilities. They wanted to build a completely post 84 00:06:06,200 --> 00:06:10,119 Speaker 1: oil economy. Essentially, they wanted to set that up using 85 00:06:10,200 --> 00:06:15,600 Speaker 1: oil funds to put them in position to thrive when 86 00:06:15,720 --> 00:06:19,800 Speaker 1: oil was no longer a business. Really, and this was 87 00:06:19,800 --> 00:06:23,120 Speaker 1: sort of controversial, right, because some people in Guyana, you right, 88 00:06:23,279 --> 00:06:25,240 Speaker 1: didn't want anything to do with the go They said 89 00:06:25,360 --> 00:06:27,880 Speaker 1: leave it under the water because it's you know, a 90 00:06:27,960 --> 00:06:31,400 Speaker 1: path to ruin. And the way they moved ahead was 91 00:06:31,600 --> 00:06:33,080 Speaker 1: by saying no, no, no, we're going to use it 92 00:06:33,160 --> 00:06:36,680 Speaker 1: for a better purpose. Yeah, and this is not just 93 00:06:36,760 --> 00:06:39,640 Speaker 1: in Guyana, but internationally. Of course, there's a lot of 94 00:06:39,680 --> 00:06:44,840 Speaker 1: people who think that new oil discoveries should be left 95 00:06:44,839 --> 00:06:47,640 Speaker 1: in the ground, that oil is on its way out, 96 00:06:47,760 --> 00:06:51,880 Speaker 1: we should be putting our resources and energy into renewable 97 00:06:52,400 --> 00:06:57,080 Speaker 1: sources of energy. And in fact, the Secretary General of 98 00:06:57,200 --> 00:07:01,320 Speaker 1: the United Nations earlier this year made a statement saying 99 00:07:01,400 --> 00:07:06,159 Speaker 1: that it was economic and moral madness to invest in 100 00:07:06,200 --> 00:07:09,840 Speaker 1: new fossil fuel infrastructure. So there is this, you know, 101 00:07:10,040 --> 00:07:16,280 Speaker 1: current against developing new fossil fuel resources that Guyana was facing. 102 00:07:16,520 --> 00:07:19,760 Speaker 1: But of course Guyana had no resources to build the 103 00:07:19,760 --> 00:07:22,960 Speaker 1: green infrastructure. So it's easy for others to say you 104 00:07:23,000 --> 00:07:25,640 Speaker 1: should put your resources toward a green energy, but if 105 00:07:25,640 --> 00:07:29,280 Speaker 1: you have no resources, there's nothing to put there exactly. 106 00:07:29,360 --> 00:07:33,760 Speaker 1: And the leaders of Guyana will point out that the 107 00:07:33,960 --> 00:07:38,120 Speaker 1: developed countries of the world, the ones that have created 108 00:07:38,440 --> 00:07:44,160 Speaker 1: more greenhouse gas emissions than undeveloped countries like Guyana, that 109 00:07:44,280 --> 00:07:46,720 Speaker 1: they have kind of dropped the ball in terms of 110 00:07:46,800 --> 00:07:51,600 Speaker 1: compensating countries like Guiana that did not really contribute to 111 00:07:51,600 --> 00:07:54,960 Speaker 1: the problem. So their argument is, you know, the developed 112 00:07:54,960 --> 00:07:57,880 Speaker 1: world didn't step up, we have to step up for ourselves, 113 00:07:58,640 --> 00:08:03,440 Speaker 1: and to deny us the opportunity to use this resource 114 00:08:04,080 --> 00:08:08,760 Speaker 1: isn't fair. Manty. You asked Guyana's president your finale about 115 00:08:08,840 --> 00:08:12,480 Speaker 1: the terms of the contract. Here's what he said. They 116 00:08:12,520 --> 00:08:16,120 Speaker 1: have the necessary resources to adopt the climate change. They 117 00:08:16,160 --> 00:08:20,360 Speaker 1: have the necessary resources to invest in our alternative energy. 118 00:08:20,800 --> 00:08:25,400 Speaker 1: They have the capital that came from the exploration of 119 00:08:25,520 --> 00:08:30,600 Speaker 1: natural resources. We have a reality. We have a coastline 120 00:08:30,600 --> 00:08:33,920 Speaker 1: where more than eight of the people live that is 121 00:08:33,960 --> 00:08:36,760 Speaker 1: more than six ft below sea level. Who is going 122 00:08:36,840 --> 00:08:39,480 Speaker 1: to pay to ensure that we have the type of 123 00:08:39,520 --> 00:08:44,920 Speaker 1: mitigation and adaptation measures to prevent the catastrophic type of 124 00:08:44,920 --> 00:08:49,000 Speaker 1: flooding that rising sea level can bring. We have to 125 00:08:49,040 --> 00:08:52,680 Speaker 1: build this infrastructure. Where is the revenue going to come from. 126 00:08:52,840 --> 00:08:56,640 Speaker 1: They'll argue that those countries in the developed world they 127 00:08:56,679 --> 00:09:00,520 Speaker 1: benefited from the oil industry in the waning days of 128 00:09:00,559 --> 00:09:04,960 Speaker 1: the industry, which Guyana's leaders will say, there's probably thirty 129 00:09:05,000 --> 00:09:08,840 Speaker 1: more years where the world will need oil. Why shouldn't 130 00:09:09,679 --> 00:09:13,839 Speaker 1: developing country like Guyana be the ones to benefit during 131 00:09:13,840 --> 00:09:16,480 Speaker 1: that time? And in May of this year, you write 132 00:09:16,480 --> 00:09:20,559 Speaker 1: about this dramatic speech an Independence Day for Guyana, where 133 00:09:20,600 --> 00:09:24,960 Speaker 1: the president got up and spoke about the country's future. Yeah. 134 00:09:24,960 --> 00:09:28,920 Speaker 1: So President Ali was up on a podium in a 135 00:09:29,080 --> 00:09:32,760 Speaker 1: a Regina, a town about three hours from Georgetown, and 136 00:09:32,920 --> 00:09:35,400 Speaker 1: rain was pouring down on this night. It was a 137 00:09:35,440 --> 00:09:40,320 Speaker 1: flag raising ceremony where at midnight the Guyanese flag was 138 00:09:40,320 --> 00:09:43,560 Speaker 1: going to raise up into the night. And before that 139 00:09:43,600 --> 00:09:48,160 Speaker 1: there were bands and singers and just a celebration of Guyana, 140 00:09:48,679 --> 00:09:52,400 Speaker 1: and the president really sort of tilted it as a 141 00:09:52,480 --> 00:09:59,600 Speaker 1: celebration of Guyana's future. Guess me, great Anna, un privileged 142 00:10:00,960 --> 00:10:06,559 Speaker 1: on behalf of the government of Guyana as your president, 143 00:10:08,000 --> 00:10:12,640 Speaker 1: the stand here humbling before you, and he just kind 144 00:10:12,640 --> 00:10:16,400 Speaker 1: of laid out the way Guyana would grow in a 145 00:10:16,440 --> 00:10:18,560 Speaker 1: way that it has never grown before and never had 146 00:10:18,600 --> 00:10:22,160 Speaker 1: the opportunity to grow thanks to oil money. As we 147 00:10:22,360 --> 00:10:26,880 Speaker 1: reflect and celebrate today, it is important for us to 148 00:10:27,040 --> 00:10:33,520 Speaker 1: understand that you have a government that is responsive, responsible, 149 00:10:34,320 --> 00:10:40,720 Speaker 1: and through active in making the right policies to enhance 150 00:10:40,760 --> 00:10:44,640 Speaker 1: the welfare of the people of our country. It sounds 151 00:10:44,960 --> 00:10:47,600 Speaker 1: like a dream come true for the people of Guyana, 152 00:10:48,040 --> 00:10:51,360 Speaker 1: But the story is a little bit more complicated than that. 153 00:10:52,160 --> 00:10:54,720 Speaker 1: More of my conversation with monte Real after the break. 154 00:11:01,600 --> 00:11:05,480 Speaker 1: So you told us about how Exon discovers this enormous 155 00:11:05,520 --> 00:11:09,360 Speaker 1: field of oil and they make a deal with the 156 00:11:09,400 --> 00:11:14,240 Speaker 1: government of Guyana to extract it and split the proceeds. 157 00:11:14,679 --> 00:11:18,760 Speaker 1: How was that deal struck? So whenever they signed this 158 00:11:18,880 --> 00:11:23,200 Speaker 1: contract in seen, it's spelled out that of the revenues, 159 00:11:23,720 --> 00:11:28,079 Speaker 1: Guyana's government would get and the oil company would get. 160 00:11:28,920 --> 00:11:31,880 Speaker 1: That sounds kind of low, doesn't it, Like Guyana only 161 00:11:31,880 --> 00:11:34,160 Speaker 1: gets half of it. Yeah, and they also got a 162 00:11:34,200 --> 00:11:37,319 Speaker 1: two percent royalty which went to the state. But if 163 00:11:37,360 --> 00:11:41,280 Speaker 1: you talk to analysts, they'll say that is low. That 164 00:11:41,520 --> 00:11:44,760 Speaker 1: in cases where it's known that this is a big 165 00:11:44,760 --> 00:11:49,400 Speaker 1: oil find. Generally that royalty that goes to the state. 166 00:11:49,440 --> 00:11:52,320 Speaker 1: If it's an even split, for example, in this case 167 00:11:52,360 --> 00:11:55,600 Speaker 1: it was two percent, analysts say that they would expect 168 00:11:55,600 --> 00:11:59,960 Speaker 1: that to be ten to in most cases the royalty. 169 00:12:00,160 --> 00:12:03,960 Speaker 1: The royalty. Yes, And if you look at the average 170 00:12:04,480 --> 00:12:08,640 Speaker 1: internationally of splits like this um there's an oil consultancy 171 00:12:08,679 --> 00:12:12,160 Speaker 1: called rice Stad that says the government's take is generally 172 00:12:12,200 --> 00:12:18,320 Speaker 1: about on average. So in that context of split doesn't 173 00:12:18,320 --> 00:12:22,160 Speaker 1: seem that great for Guyana. Well why did the government 174 00:12:22,200 --> 00:12:26,520 Speaker 1: agree to such unfavorable conditions when they were sitting on 175 00:12:26,880 --> 00:12:29,840 Speaker 1: what would seem like a pretty good negotiating position. That's 176 00:12:29,840 --> 00:12:32,320 Speaker 1: a big question. You know a lot of people have 177 00:12:32,800 --> 00:12:35,839 Speaker 1: theorized that they were just in a hurry to get 178 00:12:36,559 --> 00:12:38,640 Speaker 1: the oil as quickly as they could, to get the 179 00:12:38,679 --> 00:12:42,079 Speaker 1: infrastructure built as quickly as they could, to take advantage 180 00:12:42,720 --> 00:12:47,280 Speaker 1: of the revenues. Here's President Ali again. We have made 181 00:12:47,280 --> 00:12:52,000 Speaker 1: it very clear arrangements would not be the same, but 182 00:12:52,160 --> 00:12:55,560 Speaker 1: we are not people who are naive. Excellon came with 183 00:12:55,559 --> 00:12:58,800 Speaker 1: a time where no one knew what was there, so 184 00:12:58,880 --> 00:13:03,079 Speaker 1: the force arrangement the exploration had to be substantially different. 185 00:13:03,800 --> 00:13:08,079 Speaker 1: But even beyond that fifty fifty split, analysts will say 186 00:13:08,120 --> 00:13:12,040 Speaker 1: that this contract there are other provisions in it that 187 00:13:12,280 --> 00:13:16,959 Speaker 1: really penalize the government. For example, Xon pays no taxes 188 00:13:17,280 --> 00:13:20,160 Speaker 1: on the oil revenues. That's all taken care of by 189 00:13:20,160 --> 00:13:23,679 Speaker 1: the state. Are you saying that the government of Guyana 190 00:13:23,920 --> 00:13:28,080 Speaker 1: hays Xons taxes. There's a provision in the contract that 191 00:13:28,200 --> 00:13:32,199 Speaker 1: says all the income taxes on the oil they're paid 192 00:13:32,200 --> 00:13:34,760 Speaker 1: out of the government's share, so x On Mobile and 193 00:13:34,760 --> 00:13:39,920 Speaker 1: its partners aren't responsible for any of that. So Guyana, though, 194 00:13:40,040 --> 00:13:43,480 Speaker 1: at the same time, passes x On a receipt for 195 00:13:43,520 --> 00:13:46,720 Speaker 1: the taxes that the government paid on the company's behalf, 196 00:13:47,120 --> 00:13:50,440 Speaker 1: so Exxon can take those receipts and earn a foreign 197 00:13:50,480 --> 00:13:54,440 Speaker 1: tax credit in the United States, for example, for taxes 198 00:13:54,480 --> 00:13:57,640 Speaker 1: that the government of Guyana paid. And if you talk 199 00:13:57,679 --> 00:14:00,880 Speaker 1: to analysts, they'll say that that's highly a usual provision 200 00:14:01,200 --> 00:14:04,360 Speaker 1: that you don't really see in many contracts like this. 201 00:14:04,960 --> 00:14:08,960 Speaker 1: There are other provisions buried in the contract that allow Exon, 202 00:14:09,080 --> 00:14:14,240 Speaker 1: for example, to claim reimbursement for future expenses right off 203 00:14:14,240 --> 00:14:16,840 Speaker 1: the top that if you talk to analysts, they'll say 204 00:14:16,880 --> 00:14:20,000 Speaker 1: that's very unusual. But these are provisions that you just 205 00:14:20,040 --> 00:14:24,000 Speaker 1: don't find in most other contracts. And the end result 206 00:14:24,480 --> 00:14:26,920 Speaker 1: is that more than one analysts that I talked to 207 00:14:27,000 --> 00:14:29,280 Speaker 1: said that this is the most favorable deal they've ever 208 00:14:29,320 --> 00:14:35,640 Speaker 1: seen for a company who negotiated this deal on behalf 209 00:14:35,680 --> 00:14:38,360 Speaker 1: of Guyana. Did they not have killer lawyers in there 210 00:14:38,360 --> 00:14:41,400 Speaker 1: fighting tooth and nail with excellent Well, when you talk 211 00:14:41,480 --> 00:14:44,800 Speaker 1: to people who are in Guyana's oil business, they will 212 00:14:45,240 --> 00:14:47,920 Speaker 1: they'll admit that at the beginning of this process there 213 00:14:47,960 --> 00:14:51,680 Speaker 1: was really no one in Guyana who had expertise in 214 00:14:51,720 --> 00:14:54,520 Speaker 1: the oil sector. But with that much money at stake, 215 00:14:54,640 --> 00:14:57,080 Speaker 1: you'd think they could hire somebody and fly them down 216 00:14:57,120 --> 00:15:01,640 Speaker 1: from New York exactly. And what does Exxon have to 217 00:15:01,680 --> 00:15:04,880 Speaker 1: say about all of this? This sort of split in 218 00:15:04,920 --> 00:15:09,480 Speaker 1: these provisions are necessary because they were taking a huge risk. 219 00:15:09,680 --> 00:15:13,440 Speaker 1: They basically, we're betting on a country that did have 220 00:15:13,640 --> 00:15:19,040 Speaker 1: no oil infrastructure. So Exxon's you know, before the discovery, 221 00:15:19,080 --> 00:15:21,080 Speaker 1: there was no guarantee at all that they weren't just 222 00:15:21,360 --> 00:15:24,720 Speaker 1: throwing away money. So they argue that, you know, this 223 00:15:24,840 --> 00:15:28,880 Speaker 1: is a deal that was designed to offset the risks 224 00:15:28,920 --> 00:15:31,480 Speaker 1: that they had taken in a country that had no 225 00:15:31,920 --> 00:15:35,440 Speaker 1: oil infrastructure. Or experience. Do the analysts you talked to 226 00:15:35,600 --> 00:15:38,040 Speaker 1: say that Guyana could have gotten a better deal if 227 00:15:38,080 --> 00:15:40,560 Speaker 1: they had pushed back on some of these things. Yes, 228 00:15:40,640 --> 00:15:43,040 Speaker 1: they say that that Guyana should have gotten a better 229 00:15:43,120 --> 00:15:46,600 Speaker 1: deal given the fact that this agreement was signed in 230 00:15:47,680 --> 00:15:50,200 Speaker 1: after it was already known that this was a major, 231 00:15:50,280 --> 00:15:54,880 Speaker 1: significant find. Did Guyana have a reason why it wouldn't 232 00:15:54,920 --> 00:15:58,840 Speaker 1: want to push back against Exon Even though this is 233 00:15:59,800 --> 00:16:03,000 Speaker 1: in comparison to other deals, you know, perhaps not a 234 00:16:03,080 --> 00:16:07,560 Speaker 1: good one, it's also provides Guyana with far more money 235 00:16:07,560 --> 00:16:10,120 Speaker 1: than they've ever had, So in context, you know, even 236 00:16:10,160 --> 00:16:12,240 Speaker 1: though it's a bad deal for Guyana, they're getting more 237 00:16:12,280 --> 00:16:16,480 Speaker 1: money than they ever could have imagined before the oil strike. 238 00:16:16,760 --> 00:16:18,720 Speaker 1: But they also they are in a bit of a 239 00:16:18,760 --> 00:16:22,280 Speaker 1: tricky position because they do want to auction off more 240 00:16:22,560 --> 00:16:27,760 Speaker 1: oil exploration blocks to Exxon or other companies. So they 241 00:16:27,840 --> 00:16:31,560 Speaker 1: don't want to, for example, now go back and renegotiate, 242 00:16:32,120 --> 00:16:35,160 Speaker 1: because they don't want to scare companies off into thinking 243 00:16:35,680 --> 00:16:38,680 Speaker 1: that they go back on their word after they've signed 244 00:16:38,680 --> 00:16:41,520 Speaker 1: a deal. So they are in this position where they 245 00:16:41,520 --> 00:16:44,840 Speaker 1: want to encourage other companies to come in and make 246 00:16:44,920 --> 00:16:51,320 Speaker 1: bids on new exploration blocks and all of that money 247 00:16:51,360 --> 00:16:54,720 Speaker 1: that they're making from this deal comes with a certain danger. 248 00:16:55,080 --> 00:16:57,120 Speaker 1: We'll talk to Money about that when we come back. 249 00:17:06,480 --> 00:17:10,720 Speaker 1: How has all this money transformed Guyana? Well, it has 250 00:17:10,800 --> 00:17:14,240 Speaker 1: become the fastest growing economy in the world. If you 251 00:17:14,240 --> 00:17:17,920 Speaker 1: look at the gross domestic product, the economy of Guyana 252 00:17:18,000 --> 00:17:21,040 Speaker 1: has grown by almost fifty in the last year. So 253 00:17:21,119 --> 00:17:25,120 Speaker 1: this is a significant supercharging effect that oil has had 254 00:17:25,200 --> 00:17:27,879 Speaker 1: on Guyana's economy. And where's all that money going. What 255 00:17:27,960 --> 00:17:29,800 Speaker 1: are they spending it on? A lot of it's going 256 00:17:29,880 --> 00:17:33,399 Speaker 1: on construction. Capital expenses I think grew by about a 257 00:17:33,440 --> 00:17:36,520 Speaker 1: hundred and seven percent last year. What are they building. 258 00:17:38,320 --> 00:17:41,119 Speaker 1: They're building a lot of roads and a lot of houses, 259 00:17:41,720 --> 00:17:45,439 Speaker 1: so especially housing developments and things like that. There's always 260 00:17:45,440 --> 00:17:48,440 Speaker 1: been a backlog of people in Guyana who have wanted 261 00:17:48,480 --> 00:17:51,680 Speaker 1: to build houses, but there just hasn't been the infrastructure. 262 00:17:51,920 --> 00:17:53,720 Speaker 1: So someone might want to build a house, but there's 263 00:17:53,760 --> 00:17:58,240 Speaker 1: no electricity hookup or sewage service. So now the government 264 00:17:58,280 --> 00:18:01,520 Speaker 1: is building new resident chill areas, paving the way with 265 00:18:01,560 --> 00:18:04,480 Speaker 1: the infrastructure that's needed for that, and so there's a 266 00:18:04,480 --> 00:18:09,199 Speaker 1: lot of people building houses, and so our ordinary citizens 267 00:18:09,240 --> 00:18:13,440 Speaker 1: of the country themselves benefiting or they are benefiting from 268 00:18:13,480 --> 00:18:17,280 Speaker 1: the building that's going around them. It's both. So there 269 00:18:17,320 --> 00:18:20,960 Speaker 1: are things like new hotels that are popping up, uh 270 00:18:21,000 --> 00:18:23,919 Speaker 1: and things like that. But in terms of you know, 271 00:18:24,000 --> 00:18:27,120 Speaker 1: the building of new houses, there are people who are 272 00:18:27,119 --> 00:18:31,200 Speaker 1: moving into new residences, getting cars. The number of car 273 00:18:31,280 --> 00:18:35,640 Speaker 1: registrations has spiked dramatically in the last two years. You're 274 00:18:35,760 --> 00:18:39,159 Speaker 1: starting to see right now effects of this. You know, 275 00:18:39,200 --> 00:18:41,919 Speaker 1: when I talked to people in Guyana. You know, the 276 00:18:41,960 --> 00:18:46,000 Speaker 1: discovery was announced in so people have been looking forward 277 00:18:46,040 --> 00:18:49,040 Speaker 1: to these changes for a long time, and in truth, 278 00:18:49,080 --> 00:18:52,160 Speaker 1: they didn't really see them. There wasn't much visible effect 279 00:18:52,640 --> 00:18:55,359 Speaker 1: until the last year or so. Now you see the 280 00:18:55,400 --> 00:18:58,800 Speaker 1: construction popping up all over Georgetown. You see more cars 281 00:18:58,840 --> 00:19:01,600 Speaker 1: on the road, you see new residence is being built. 282 00:19:01,640 --> 00:19:04,560 Speaker 1: So people are starting to feel it, slowly but surely, 283 00:19:04,840 --> 00:19:07,480 Speaker 1: and our average citizens in favor of it. Do they 284 00:19:07,560 --> 00:19:10,200 Speaker 1: like the idea of the oil drilling or is their 285 00:19:10,280 --> 00:19:13,560 Speaker 1: controversy around it? You know, if you talked to most 286 00:19:13,680 --> 00:19:16,679 Speaker 1: people in Guyana, they like, of course the idea of 287 00:19:16,720 --> 00:19:19,760 Speaker 1: their standard of living raising. You know, so many people 288 00:19:19,800 --> 00:19:22,840 Speaker 1: in Guyana have been living essentially in poverty for so 289 00:19:22,880 --> 00:19:28,000 Speaker 1: many years. The idea of new revenue, new development, that's 290 00:19:28,040 --> 00:19:30,960 Speaker 1: all very attractive to most people. Of course, there are 291 00:19:31,040 --> 00:19:36,320 Speaker 1: people who opposed this on environmental grounds, but if you 292 00:19:36,400 --> 00:19:39,880 Speaker 1: look at, you know, kind of the average citizen in Guyana, 293 00:19:39,960 --> 00:19:43,760 Speaker 1: I think most people are excited and also a little 294 00:19:43,800 --> 00:19:48,399 Speaker 1: impatient about those revenues affecting their lives. They want to 295 00:19:48,400 --> 00:19:53,760 Speaker 1: see the changes. So how did the government deal with 296 00:19:53,880 --> 00:19:57,600 Speaker 1: this just massive influx of money. I spoke to the 297 00:19:57,680 --> 00:20:01,840 Speaker 1: Vice President Barat Jugdeo, and he said, there is a 298 00:20:01,880 --> 00:20:04,520 Speaker 1: lot of pressure on the government whenever you get all 299 00:20:04,560 --> 00:20:08,160 Speaker 1: this new money coming in to spend it immediately. And 300 00:20:08,280 --> 00:20:11,879 Speaker 1: he said it's very difficult to tell people that the 301 00:20:11,920 --> 00:20:15,120 Speaker 1: government just can't do that because the risk is that 302 00:20:15,320 --> 00:20:21,560 Speaker 1: the economy overheats, inflation spikes, and the net effect of 303 00:20:21,600 --> 00:20:24,280 Speaker 1: all this is actually detrimental to the economy. That you're 304 00:20:24,320 --> 00:20:27,560 Speaker 1: kind of wasting this influx of money if you spend 305 00:20:27,560 --> 00:20:30,000 Speaker 1: it too fast. And that's kind of a hard sell 306 00:20:30,400 --> 00:20:32,800 Speaker 1: for people who haven't had any money for so long 307 00:20:32,920 --> 00:20:34,720 Speaker 1: to say, you know, we've got to be patient, We've 308 00:20:34,720 --> 00:20:37,360 Speaker 1: got to hold onto this for a while. They've got 309 00:20:37,359 --> 00:20:41,040 Speaker 1: to kind of tread that line in terms of spending 310 00:20:41,080 --> 00:20:43,879 Speaker 1: the money on new projects and also not spending it 311 00:20:43,920 --> 00:20:47,600 Speaker 1: too fast. One of the risks is that the economy 312 00:20:47,640 --> 00:20:53,000 Speaker 1: of Guyana becomes so dependent on oil it's basically becomes 313 00:20:53,000 --> 00:20:56,680 Speaker 1: a lopsided economy. So if there's ever a downturn in 314 00:20:56,720 --> 00:21:00,560 Speaker 1: the market, for example, the whole economy would feel that 315 00:21:00,920 --> 00:21:05,760 Speaker 1: in a potentially catastrophic way. So the government wants to 316 00:21:05,800 --> 00:21:08,360 Speaker 1: take a lot of this revenue coming in to actually 317 00:21:08,400 --> 00:21:10,919 Speaker 1: diversify the economy. So that's one of the things that 318 00:21:10,960 --> 00:21:15,480 Speaker 1: they're always preaching in political speeches and that sort of thing, 319 00:21:15,520 --> 00:21:22,120 Speaker 1: the importance of creating other industries besides oil. So Guyana's 320 00:21:22,160 --> 00:21:26,640 Speaker 1: neighbor of Venezuela course, another big oil producing nation. Are 321 00:21:26,640 --> 00:21:30,680 Speaker 1: other countries in the area sort of looking at Guyana 322 00:21:30,720 --> 00:21:33,760 Speaker 1: and saying, huh, this is a model for what we 323 00:21:33,840 --> 00:21:39,439 Speaker 1: want to do. Also, one of the interesting countries to 324 00:21:39,480 --> 00:21:44,760 Speaker 1: look at is Barbados in the Caribbean. Mia Motley, she's 325 00:21:44,840 --> 00:21:48,760 Speaker 1: Prime Minister of Barbados. She has become a really prominent 326 00:21:48,840 --> 00:21:53,439 Speaker 1: voice in environmental circles. She was the keynote speaker of 327 00:21:53,800 --> 00:21:57,800 Speaker 1: COP twenty six, the UN Climate Summit last year. Your 328 00:21:58,080 --> 00:22:04,679 Speaker 1: Highness Excellence Sees distinguished Guest ladies and gentlemen. The pandemic 329 00:22:04,840 --> 00:22:10,080 Speaker 1: has taught us that national solutions to global problems do 330 00:22:10,160 --> 00:22:14,760 Speaker 1: not work. We come to Glasgow with global ambition to 331 00:22:14,840 --> 00:22:19,320 Speaker 1: save our people and to save our planner. And one 332 00:22:19,320 --> 00:22:21,639 Speaker 1: of the things that she has done in recent months 333 00:22:21,720 --> 00:22:26,560 Speaker 1: is she reopened the waters of Barbados to oil exploration, 334 00:22:27,040 --> 00:22:32,960 Speaker 1: and she has basically echoed Guyana's rationale. In explaining her decision, 335 00:22:33,080 --> 00:22:35,800 Speaker 1: she said, you know, the developed countries of the world 336 00:22:35,800 --> 00:22:39,640 Speaker 1: have not given us the resources that they pledged for 337 00:22:39,720 --> 00:22:43,280 Speaker 1: us to adapt to climate change, so we have to 338 00:22:43,320 --> 00:22:46,439 Speaker 1: look for this money elsewhere. And so she also is 339 00:22:46,520 --> 00:22:50,520 Speaker 1: looking at the possibility of building up the oil sector. 340 00:22:50,600 --> 00:22:54,080 Speaker 1: They're much as Guyana has. So, yeah, Guyana is a 341 00:22:54,119 --> 00:22:56,680 Speaker 1: little bit of a model among some of its neighbors, 342 00:22:56,680 --> 00:23:01,159 Speaker 1: particularly in the Caribbean, those countries that are vulnerable to 343 00:23:01,440 --> 00:23:07,040 Speaker 1: the effects of for example, sea level rise. And are 344 00:23:07,040 --> 00:23:09,240 Speaker 1: they a bit of a cautionary tale as well? That 345 00:23:09,800 --> 00:23:11,400 Speaker 1: sure they got a lot of money, but they didn't 346 00:23:11,440 --> 00:23:14,000 Speaker 1: get such a good deal that other countries might want 347 00:23:14,040 --> 00:23:16,840 Speaker 1: to negotiate a little bit more when it comes to 348 00:23:17,440 --> 00:23:20,520 Speaker 1: giving away the store. Sure. Yeah, there are a lot 349 00:23:20,560 --> 00:23:22,360 Speaker 1: of people who look at this guy on a deal 350 00:23:22,400 --> 00:23:26,200 Speaker 1: and who are critical of it. And I think that 351 00:23:26,520 --> 00:23:29,240 Speaker 1: any country now that signs a new deal, if there 352 00:23:29,440 --> 00:23:33,639 Speaker 1: is a discovery even close to this scale in the future, 353 00:23:33,680 --> 00:23:35,240 Speaker 1: I think that they would look at this guy on 354 00:23:35,320 --> 00:23:39,119 Speaker 1: a deal as a path to avoid in terms of 355 00:23:39,160 --> 00:23:41,399 Speaker 1: some of the deals in the contract that we're written 356 00:23:41,400 --> 00:23:44,000 Speaker 1: into it. Monty Real, thanks so much for coming on 357 00:23:44,040 --> 00:23:47,080 Speaker 1: the show. Thanks very much for having me. You can 358 00:23:47,119 --> 00:23:51,600 Speaker 1: read monte reel story about Guyana on Bloomberg dot com. 359 00:23:51,640 --> 00:23:53,800 Speaker 1: Thanks for listening to us here at The Big Take, 360 00:23:54,119 --> 00:23:57,960 Speaker 1: the daily podcast from Bloomberg and I Heart Radio. For 361 00:23:58,200 --> 00:24:01,080 Speaker 1: more shows from my Heart Radio, visit the I Heart 362 00:24:01,160 --> 00:24:05,920 Speaker 1: Radio app, Apple Podcasts, or wherever you listen. Read today's 363 00:24:05,960 --> 00:24:09,680 Speaker 1: story and subscribe to our daily newsletter at Bloomberg dot 364 00:24:09,680 --> 00:24:13,480 Speaker 1: com slash Big Take, and we'd love to hear from you. 365 00:24:14,040 --> 00:24:17,560 Speaker 1: Email us with questions or comments to Big Take at 366 00:24:17,680 --> 00:24:22,560 Speaker 1: Bloomberg dot net. The supervising producer of The Big Take 367 00:24:22,720 --> 00:24:27,040 Speaker 1: is Vicky Burgalina. Our senior producer is Katherine Fink. Our 368 00:24:27,080 --> 00:24:31,200 Speaker 1: producer is Rebecca Shasson. Our associate producer is Sam Gobauer. 369 00:24:31,600 --> 00:24:36,040 Speaker 1: Hilda Garcia is our engineer. Original music by Leo Sidrin 370 00:24:36,480 --> 00:24:38,639 Speaker 1: I'm West Cansova. Have a great weekend.