Rystad Energy – Guyanese must get down to the hard questions and answers
Letters
Dear Editor,
I treated myself to the rarity of listening to the recent Rystad Energy presentation at Duke Lodge. Rystad’s Mr. Shreiner Parker tried manfully during the Q & A segment to represent the product prepared by Rystad’s packaging and marketing insiders (analysts). He, however, could have been much smoother and more persuasive at crucial points in his delivery; he stumbled and vacillated too often, too clumsily. My interest was less on Mr. Parker, and more on his Guyanese questioners, who ran the gamut from inquirers to probers to interrogators. They were even some helpers and boosters into Mr. Parker’s distinctly American flavoured spiel.
I have problems with failure to disclose timely on independence and oil company relationships; qualifications of developers of the marketing package about Guyana’s oil; and the underpinnings for Rystad’s position that the gas-to-shore project is “viable” and “necessary.” These are not paltry issues, but have much meaning for this largely ignorant and captive society. Still, I was troubled by the local audience of questioners, and the responses articulated by Mr. Parker.
First, I heard of models and lush numbers for Guyana decades hence. I did not hear hard questions about the underlying assumptions in those models. After all, the best models are only as good as the quality of the assumptions fed into them, the conclusions resulting. In standard American speak, too often it is a case of the GIGO effect -garbage in, garbage out, but doggedly to accentuate the positive. It is a fact of life, business life included, that nobody celebrates negatives.
Then, the thinking was that Guyanese fact finders and truth seekers would push for the kind of stress tests conducted on Rystad’s alluring numbers, how rigorous those stress tests were, with the range of numbers result therefrom. Oil price, demand levels, interest rates, currency considerations, force majeures (pluralised for emphasis), hedging costs, and competing energy developments, including radical ones. Admittedly, 20- and 30-year scenarios are eternities in a commodity as choppy as oil. Currently, gasoline prices are falling in the U.S., but demand is falling also. Did the oil powers price overdo pricing, leading to initial demand destruction? Simply stated, Guyanese needed to peel back the onion to get to the real truths about their future, even if it had to make Mr. Parker’s eyes drip.
Chris Ram, Glenn Lall, SN’s Marcelle Thomas, and Demerara Waves’ Denis Chabrol were relentless questioners, even if there were the sometimes top heavy, or thinness. The follow up required to pin down Rystad (the speaker is only cagey messenger) to unravel what all these numbers may (may) mean for Guyanese. The moderator, Mr. Rambarran I think, managed with balance and aplomb. On the other hand, I was taken aback when other Guyanese were very pleased to engage in self-marketing or demonstrate charming sophistication, only to succeed at their objectives, which were to feed into Rystad’s lovefest and bolster it, like foreign corner men with Guyanese accents. It was a classic case of boosterism through shameless personal hucksterism. Now, it is opportune to offer this position: Guyana needs pure business reporters armed with commensurate knowledge and skills, who understand both theory and practice, what they actually mean. They need to get in the minds of presenters. Fly at 35,000 feet with snake charmers and their enthralling numbers; but be adept at crawling through the weeds to get to the bottom of clogged swamps.
Next, everybody is telling us how an oil spill is the equivalent of a Black Swan event (1 in 10,000 years). It is until it happens. A more down-to-earth scenario is preferred. Air travel is the safest statistically. That is, until a catastrophic one involving people occurs. Thus, contingencies like airline insurance (mandatory); automatic passenger insurance (credit card courtesy, business practice); and passenger self-coverage (voluntary). But it is layers of such protections costing cold cash. Relative to oil spill insurance, the conversation is of billions. The question and concern are whether that cost has been factored in Rytsad’s splendid numbers. Meaning, the what ifs -disclosures and their level of materiality, probability of occurrence, and contingencies taken, all featured. These are standard in SEC filings.
My thinking is that everybody is highlighting the good new days ahead, and how great they will be. Fabulous! My hope, my plea, is for both foreigner sellers and Guyanese watchers to approach honestly and frankly with all cards on the table. There is one card that should always ace Exxon’s card and the card of the Guyana Government. It is that of the Guyanese people. Let’s us try our best to get to the bottom of the thickets and tangles of luscious numbers.
Sincerely,
GHK Lall
