Grant no further concessions for oil companies …until model PSA is finalised

Grant no further concessions for oil companies …until model PSA is finalised – Jagdeo

Jun 08, 2019 News

Government shouldn’t be granting concessions to oil companies in the near future. If concessions are to be granted, let them be guided bythe Model Production Sharing Agreement (PSA) after it is finalised. This is the advice of Opposition Leader Bharrat Jagdeo to government.

Opposition Leader Bharrat Jagdeo

During a press conference on Thursday, Jagdeo was responding to questions about awards of oil blocks to several oil companies.
The Transparency Institute Guyana Initiative (TIGI) has criticised the Production Sharing Agreement (PSA) Government signed with Exxon’s subsidiary, Esso Exploration and Production Guyana Limited (EEPGL) for the Stabroek Block, as “illegal, irretrievably flawed” and “either the result of grand corruption or grand incompetence.”
The contentions raised by TIGI are that the PSA is in contravention with the Constitution and the Procurement Act. The Institute also complained about the lack of ring-fencing provisions in the contract.
The contract is said to have given too many concessions to Exxon.
Concerns have been raised for some time about whether the contract is advantageous for Guyana, with calls being made for a renegotiation, while others say that renegotiation isn’t an option if a contract is found to be illegal in the first place.
Jagdeo is saying that no further concessions should be granted to oil companies until Guyana’s PSA is complete because the contract with Exxon has set a precedent for how contracts are made with other companies.
He has said that no oil companies should be granted the concessions that Exxon was granted.
Jagdeo now supports three independent probes into the award of oil blocks for the Kaieteur, Canje and Stabroek blocks. He was asked whether the Stabroek block should be rescinded from Exxon; he said that an investigation would decide that.
“If this government found reason to renegotiate the Exxon contract and make it even more lucrative, in my view, than 1999, there has to be a reason why we can review all those exploration contracts that were issued when we come to the production stage because now we have five billion barrels of proven oil out there,” Jagdeo said.
He said it was upsetting to him that Government “was rushing, in the parliament, to accord similar concessions to what Exxon got when we said ‘No future companies should get the same’”.
Since the year started, Government has already granted concessions to several oil companies, in accordance with the agreements made on the PSAs. Those include Tullow Guyana B.V., Repsol Exploracion Guyana S.A. and Ratio Guyana Limited on the Orinduik, Kanuku and Kaieteur Blocks respectively.
“Every week, we were saying ‘Why not put a hold on that until you have the model production sharing agreement?’” Jagdeo said.
The last time the public has heard of that PSA was early last month when Energy Department Head, Dr. Mark Bynoe, said that the fiscal clauses contained in it will have to be reviewed by two key agencies—the Guyana Revenue Authority (GRA) and the Ministry of Finance.
This move by the Energy Department is in keeping with one of the key recommendations of the International Monetary Fund (IMF), which had stated since 2016 that the Ministry of Finance and the Guyana Revenue Authority should have primary responsibility for the wording and interpretation of fiscal and tax provisions of the model Production Sharing Agreement.
Bynoe had said that provisions within the PSA are very strong and will likely be the best model contract ever.
It is unclear when the model will be completed.

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