The 1999 PPP/C contract with EXXON does not bind the Coalition Government

Feb 20, 2018 Features / Columnists, Peeping Tom

The Coalition Government has resorted to the oldest trick in the book. It is diverting attention from its own shortcomings by casting blame for its failings on the Opposition.
The government is resorting to political propaganda in order to justify its actions in signing a lopsided agreement with ExxonMobil. This is as low as any government can get.
The government has released the contract which was signed by the PPP/C Administration with CGX in 2013. It has sought to do this so as to show that what the PPPC agreed to in that contract which is almost similar to that which the APNU+AFC signed with ExxonMobil. In of other words, it is saying that if the PPP/C can do that, then what is wrong with us doing it.
This old three-card trick may convince dunderheads but not persons with discriminating minds. The government is only fooling itself into believing that this worn-out trick will bring acceptability to the foul-deal which it signed as ExxonMobil.
The APNU+AFC Government signed a Petroleum Agreement with Exxon. It was signed after oil was discovered. It is essentially a Production Sharing Agreement (PSA).
On the other hand, the PPPC signed a Petroleum Agreement when no oil had been discovered in Guyana. The agreement was essentially (and this will be further explained) was a Petroleum Prospecting Agreement (PPA).
The PPP/C has explained that it signed the agreements with both ExxonMobil and CGX based on a template which was being used at the time when the country was seeking investment in the petroleum. No oil had yet been found.
In the past and now with this disclosure of the CGX contract, the APNU+AFC Government had sought to suggest that it was not lawfully obligated to re-negotiate the 1999 Agreement which was signed by the PPP/C. This is not so. I will show how the deal that the APNU+AFC Government signed with ExxonMobil had to be re-negotiated because the 1999 agreement had lapsed.
The APNU+AFC have long asserted that it was limited in what it could have done during its negotiations with ExxonMobil because it inherited the 1999 deal. The 1999 deal, as I will show had expired, and therefore did not bind the APNU+AFC.
When it comes to petroleum prospecting and production, the law of our land is the Petroleum (Exploration and Production) Act, not any agreement, whether it was signed in 1999 or 2016. No agreement can make a fool of the law. The Petroleum Act is what matters and which effectively had invalidated any prospecting licence issued under the 1999 Contract.
Section 24(1) of the Petroleum (Exploration and Production) Act states:
“Subject to this Act, a person who holds a petroleum prospecting licence may apply for the renewal of the licence, but not more than twice, in accordance with the Regulations.”
Section 25(1) limits the term of each renewal to a period not exceeding three years. The accumulative effect of these two sections of the Petroleum (Exploration and Production Act) in respect to the petroleum prospecting is that any prospecting license issued under the 1999 contract under the PPP/C would not have been valid under the law six years after the effective day of that licence.
The PPPC contract with Exxon was signed in 1999 and therefore, assuming that the prospecting licence was effective from 2001 (the Contractor has to be given time to mobilise capital), no prospecting licence could have been lawfully issued after 2007.
Therefore, the APNU+AFC cannot now contend that it inherited the Exxon contract from the PPPC. It inherited a contract which could not have issued a lawful prospecting licence and therefore the 1999 contract could not bind the APNU+AFC.
But assuming, for argument sake, that somehow there was a valid prospecting licence issued to Exxon, there is nothing in the law which would have bound the government to issue a production licence on the same terms as the 1999 contract. The law clearly makes provision for what happens when oil is found under a prospecting licence and what happens afterwards in terms of the application for a production licence.
The government bungled the negotiations. As a result, it is now resorting to blaming the PPP/C. Of all the parties in the country, look whose standards, the APNU+AFC are judging its own track record against!

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