EPA, Energy Dept. show room exists to amend Exxon contract – This contradicts govt.’s nonsensical approach – Dr. Mangal

Mar 13, 2019 News

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By Abena Rockcliffe-Campbell
While the APNU+AFC government has taken a position that it will not trouble the “strangling” provisions of its contract with ExxonMobil, the Environmental Protection Agency (EPA) and the Department of Energy have taken steps that are tantamount to amending some of the provisions that are deemed stacked against Guyana.
According to the Production Sharing Agreement (PSA) between Guyana and ExxonMobil’s subsidiary, Esso Exploration and Production Guyana Limited (EEPGL), the Minister, through his duly appointed representatives, must give the company seven days notice before making a visit.
EPA would be categorized as one of those “duly appointed representatives”.
However, that agency has refused to be relegated to such long notices.
EPA Head, Dr. Vincent Adams is on record as saying, “I am aware that the agreement calls for seven days notice, but the EPA will not be bound by this. The agency has the authority to visit the site and they (Exxon) have agreed that our designated officer will be granted entry at all or any time(s). This provision was included in their permit for Liza Phase Two. This is not something out of the ordinary for regulators of the sector. In fact, it is in keeping with international best practices, which Exxon is very much familiar with. So when we put it to them, there was no objection from Exxon, they said they understand.”

Dr. Adams, who has years of experience in the business, holds the view that the element of surprise is paramount when executing functions as an oversight body. He said that with seven days notice, the government would be giving oil companies—in this case EEPGL—ample time to make things appear to be well in order.
That is not the only change.
Currently, the ExxonMobil-Guyana contract allows the oil giant to self-insure. This means that the company has given the nation some level of assurance that it will handle the liabilities that come with any possible oil spill.
But, the Energy Department has initiated discussions with Central Bank to ensure oil companies comply with the nation’s laws on having a recognized insurance policy.
This was confirmed by Energy Department Head, Dr. Mark Bynoe. He said that there will be no approval from the Department of Energy for companies to self-insure.
Dr. Bynoe said, “The contract speaks to the fact that the minister can have a waiver and allow a company to self-insure, That is at the discretion of the minister, but we are taking a position which says that we will not be allowing self-insurance, because it would go against Guyana’s laws.”
These two moves show that there are ways around the strenuous provisions, and that ExxonMobil is willing to comply with certain changes. As it seems, the main changes that the oil company is against would be those that have to do with the financial regime. This is the area that will affect Guyana’s share of the revenues.
The APNU+AFC government has long been under pressure from foreign experts and patriots alike to renegotiate the deal to secure a better share for Guyana.
But the government has resisted this, citing utmost respect for the sanctity of contracts.
Kaieteur News contacted former presidential advisor on oil and gas, Dr. Jan Mangal for his take on the fact that the agencies have been able to secure better provisions without actually amending the contract.
The Oil and Gas Consultant maintained his take that government’s bid about the sanctity of contracts is just an excuse.
He said, “There is no such thing in the natural resources sector, especially when you have deals between governments and private companies. When government goes on about this, it is quite silly. It is not based on evidence. Trinidad is renegotiating their contracts. Liberia renegotiated theirs and I have been supplied by Colombia with examples of this around the world. So the excuse is nonsensical. These politicians are afraid of Exxon; hence there is a need for pressure from the media on the government on this matter.”
Dr. Mangal acknowledged that indeed, if the EPA can take a stand, then surely Government can do the same. He reasoned that Exxon perhaps did not fight the EPA because for them, in the grand scheme of things, it is inconsequential.
Dr. Mangal noted however that changing the royalty, from two to more, would see Exxon putting up a fight. He said that it may want to take Guyana to arbitration, but Guyana still needs to bite the bullet and do it. Dr. Mangal insisted that Guyana needs to withhold the approval of the Liza Two Permit and subsequent projects until the fiscal terms are revised; until the nation gets what it deserves.

 

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