Govt. decides against complete review of Exxon’s oil exploration contract

Mar 09, 2017 News

…Moves to add royalty clause

By Abena Rockcliffe-Campbell

The age-old agreement signed between the Government of Guyana and oil giant ExxonMobil

Minister of Natural Resources, Raphael Trotman

will stand.
Minister of Natural Resources Raphael Trotman recently indicated that the government has decided to add a few clauses but will not be deleting any of the existing provisions.
“We have decided against a complete overhaul. Instead, we will add some new features,” said Trotman, as he spoke about progress being made by the APNU+AFC government to secure Guyana’s wealth.
The move not to review the contract represents a change of heart, as government had originally signaled its intention to tighten the document. While the complete review will no longer be done, Trotman said that ExxonMobil is committed to facilitating all additional clauses. The Minister said that some clauses will be added to facilitate an environmental project in promotion of the much-touted green economy. Also, a royalty rate will be added.
Last June, Trotman had told Kaieteur News that the contact that is currently governing ExxonMobil’s oil exploration is one that has been signed since 1999. That would have been during the reign of the People’s Progressive Party/ Civic (PPP/C) government.
”It’s a pretty old agreement, but it remains enforced, because we respect the sanctity of above board agreements. However, government has taken the opportunity to have the agreement reviewed, if not wholly, certain parts.”
He had said that the contract was being reviewed to secure an even stronger relationship with the American company.
The Natural Resources Minister had also told Kaieteur News that it was imperative that the contract be updated to conform with standards of today, as having been signed in 1999, the contact can be considered outdated in some areas.
He had explained that there are some industry practices which would have evolved over the years.
Trotman was asked if he felt the contract provides adequate protection for Guyana as a young nation about to enter into the oil business. He replied, “It is relative. I think that the agreement signed in 1999 perhaps represented the best that Guyana could have gotten at the time. The agreement itself is not a bad one, but with the passage of time… from 1999 to 2016, we believe that there are some areas that can be strengthened; and we are working with the company to do so.”
ExxonMobil is the only company that has so far found oil in commercial quantities in Guyana.

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