Citizens could challenge oil contract if it is in conflict with the law

Citizens could challenge oil contract if it is in conflict with the law – Ram

Apr 13, 2019 News

Chartered Accountant and Attorney-at-Law, Christopher Ram

The government may not be willing to renegotiate the oil contract it signed with Exxon’s subsidiary, Esso Exploration & Production Guyana Limited (EEPGL), but if that contract is in conflict with the law, it could be challenged in court.
This is according to Chartered Accountant and Attorney-at-Law, Christopher Ram. His comments come on the heels of a statement made by newly accredited US Ambassador to Guyana, Sarah-Ann Lynch, that if there is anything to be done, the ball is in Guyana’s court.
During a media engagement at the Embassy in Kingston on Monday, Lynch said that the US government does not intend to intervene to facilitate a renegotiation of the contract. She said that the main role of the US is to foster opportunities in the budding oil and gas sector.
However, there are critics who have purported, since the discovery of high quality reservoirs as early as 2015, that Guyana does not get enough from the contract. Worries continued to mount as consecutive discoveries of wells indicated that there are over five billion barrels of oil to be extracted.

US Ambassador to Guyana, Sarah-Ann Lynch

US Ambassador, Sarah-Ann Lynch

Currently, Guyana is set to share profits 50/50 with Exxon, and benefit from a two percent royalty for every barrel it declares. The profit would only come into play after ExxonMobil and its two other partners take their expenses out; expenses that include pre-2015 spending.
Lynch was asked whether Guyana has the right to facilitate a renegotiation of the deal. She said that there is recognition of the country’s sovereignty. There is much potential for benefit when production commences, she told the press, given the magnitude of the discoveries made in Guyana’s waters.
She said that it would be up to the government to work with the private sector (ExxonMobil) to see if there is room for renegotiation, so that Guyanese could benefit more.
Former Minister of Trade, Industry, Investment and Communications in Trinidad and Tobago, Vasant Bharath, had said in February that the leverage of an oil-producing country to renegotiate is proportionate to the magnitude of the find. He said that that principle holds true in Guyana, since the country’s reserves stand over five billion barrels of high quality oil.

Leader of the Opposition, Bharrat Jagdeo

But whether there has been any indication of willingness to renegotiate that contract by either of the major political players is another story.
According to Ram yesterday, though the government has a duty to govern in the interest of the people, the persons who would be most instrumental to the renegotiation process – government officials – are resisting calls made for it, at every turn.
Further, he said, an obstacle to renegotiation is that there seems to be no expertise in the government in this regard.
The question of renegotiation has been posed to Government officials several times, and it was constantly iterated that that will likely not happen at this time.
When the presidential candidate of the People’s Progressive Party, Mohamed Irfaan Ali, was asked on Thursday last whether he would consider renegotiating the contract if he becomes President, he said that his party’s leader, Bharrat Jagdeo, had already spoken on that issue, and that he would not stray from Jagdeo’s declaration. The Opposition Leader had told the press in February that Guyana is now at the stage where it must focus less on the unfair provisions of the “poorly negotiated” contract and look now to make sure that it is not robbed of what it managed to secure under the contract.
Asked how the unwillingness of political leaders’ to renegotiate the contract could be remedied, Ram said that the government’s hand can’t be forced.
However, if there is a willingness to upend the contract, there are other options that citizens have at their dispensation. One of those, he said, is that the oil deal could be challenged in court, if an article is found to be in contravention of the law(s) of Guyana.

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