Despite public outrage… Contract renegotiation proving successful – TT PM tells oil and gas stakeholders

Feb 05, 2019 News

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By Kiana Wilburg reporting from Trinidad and Tobago
When the Trinidad and Tobago government signaled its intention last year to pursue contract renegotiation with oil companies, there was great outrage. But that did not prevent Prime Minister, Dr. Keith Rowley, from securing a better deal for his people.
Dr. Rowley confidently stated yesterday at his country’s annual three-day energy conference, that the process of contract renegotiation is proving to be a success.
Speaking to hundreds of oil and gas stakeholders in attendance at the Hyatt Hotel, the Prime Minister in his keynote address said, “Given the importance of the domestic energy sector, this Administration has focused on creating stability, and where necessary, reforms within the sector in order to optimize its contribution to the national economy.
“However, on assumption to office, we realized that there was an imbalance in the financial returns accruing to stakeholders, particularly as it relates to Liquefied Natural Gas (LNG).”
Dr. Rowley continued, “The upstream companies and their marketing affiliates were enjoying the lion’s share of the revenue accruing from this business and the Government and by extension, the people of this country were receiving minimal returns. We highlighted this concern in the Spotlight on Energy which was held at this very venue in March of 2018.”
He added, “This evoked the ire of some local energy commentators who were of the view that we were sending the wrong signals to the upstream companies. Notwithstanding this not so surprising reaction, we persevered.”
Dr. Rowley said that in April 2018, he and his government met with senior executives of both Shell and BP in London to discuss a more equitable arrangement for the sharing of revenue accruing from LNG.
Arising from the discussions, Dr. Rowley said that both sides established Empowered Negotiating teams to review the LNG marketing arrangements. He revealed that Phase One of negotiations with BP was completed and a Memorandum of Agreement was executed, which provided for the payment of US$73M for royalty gas claimed by the Government.
He said, too, that the engagements provided for a new Train One marketing arrangement for Atlantic-LNG, one of the world’s largest producers of Liquefied Natural Gas.

Further to this, the Prime Minister added that negotiations with both BP and Shell are continuing and are projected to be finalized by the end of first quarter 2019. In this regard, Dr. Rowley said, “I wish to compliment both companies on the professional manner in which negotiations are conducted and look forward to a mutually satisfying outcome.”

NOT SET IN STONE
During his visit to Guyana last September, the TT Prime Minister had said that while the Government of Trinidad and Tobago respects the “sanctity” of contracts, it does not subscribe to the notion that contracts are set in stone.
He was at the time, answering questions from Kaieteur News at the signing of a Memorandum of Understanding (MoU) on Energy with Guyana.
Dr. Rowley had said, “We have respected the sanctity of contracts while not accepting that contracts are set in stone. Contracts are engagements made between two parties and when you make contracts, if there is goodwill between the participants, and if the intention is for both participants to benefit from the nature of the contract, we see the possibility and the opportunity for the contracts being revisited so as to maintain the balance of the elements of the contract.”

The TT Prime Minister said that this is the basis on which his government has approached oil companies in its borders on the renegotiating of contracts.

CALL FOR RENEGOTIATION HERE
Local commentators have long expressed concern over the deal Guyana signed with ExxonMobil, especially when it is compared with other agreements Exxon signed on to with other nations such as Ghana.
The Ghanaian contract, for example, has an entire section dedicated to procurement laws, which ExxonMobil must follow at all times. Those provisions are in place to ensure that a significant number of local companies are able to benefit from the nation’s oil sector. Guyana’s contract, on the other hand, mentions nothing about procurement laws.
Additionally, if Government so desires, it would be able to tap into the expertise of an international group, which helps countries in the successful renegotiation of contracts on a pro bono basis. The group is called the International Senior Lawyers Project (ISLP).
Over the past 17 years, with support from law firms, foundations, and government agencies, ISLP has mobilized hundreds of experienced lawyers to provide more than $100 million worth of pro bono legal assistance in support of just, accountable and inclusive development in more than 80 countries.
The Project was successful in helping Liberia renegotiate its contracts with Arcelor Mittal S.A., a German-based steel manufacturing company and American company Firestone Tire and Rubber.
The group has also helped other countries across the world in the renegotiation of oil contracts.
ISLP is also no stranger to Guyana, as it has provided support to the Attorney General’s Office for the review of Guyana’s Cyber Crime Bill and Electronic Transactions Bill.

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