Suggestions that renegotiation would scare away investors incorrect

Suggestions that renegotiation would scare away investors incorrect – T&T Energy Minister

Jun 17, 2019 News

… Says Govt. and investors are to operate as equals

Guyana is less than a year away from First Oil, but government has remained adamant that it will not renegotiate the Production Sharing Agreement (PSA) with ExxonMobil’s subsidiary, Esso Exploration and Production Guyana Limited (EEPGL) for the Stabroek Concession. It is the view of the Coalition Administration and even the private sector that if contracts are renegotiated now, it would scare away investors.
But Franklin Khan, Minister of Energy of Guyana’s sister CARICOM state, Trinidad and Tobago, in a recent address to the T&T House, rubbished that criticism. As a matter of fact, the T&T administration was recently successful through the National Gas Company of T&T (NGC), in renegotiating better terms for government with the shareholders of Atlantic LNG, a liquefied natural gas producing company. NGC is one of the major shareholders of Atlantic LNG, along with BP, Royal Dutch Shell, and China Investment Corporation (CIC).

T&T Minister of Energy and Energy Industries, Franklin Khan

The administration had found that there was a need to discuss better terms and conditions for improved revenue for Trinidad and Tobago from LNG sales.
Minister Khan, during his address to the T&T House last week, said that when the government assumed office in 2015, it found that the T&T energy sector was “not in a good place”. Government had received criticisms from the political opposition, the United National Congress (UNC), that the move to renegotiate would be anti-investment, and that it would constitute a violation of the sanctity of contracts.
Minister Khan said that those criticisms were uninformed. He noted that, under Rowley’s leadership, government had been working assiduously on the relationships with the international players in the sector. A key consideration, he said, was that it is necessary to build a platform of mutual respect, “and an ability to sit in the same room as equals with these sophisticated multinational companies”.
In explaining the need for renegotiation last year, T&T Prime Minister Keith Rowley said, “There’s a role for the government in ensuring that the people of Trinidad and Tobago, while being participants in this very lucrative business, get more than crumbs that fall off the table.”
Contrary to the criticisms of the political opposition, Prime Minister Rowley had expressed his pleasure at the fact that those in the industry were willing to not treat contracts “as cast in stone”, and Minister Khan said last week that both Shell and BP have committed to substantial investment in the T&T industry.
Last Friday, Kaieteur News related T&T’s success with the Director General of the Ministry of the Presidency, Joseph Harmon.
The Director General said that what Rowley was talking about as a necessity for renegotiation is a “changed circumstance.”He opined that such a circumstance would be “something illegal”. Yet, Prime Minister Rowley did not mention any illegality as the reason for renegotiation. What Rowley referred to as a changed circumstance was the fact that the conditions of the agreement with Atlantic LNG no longer provided a sufficient gain of value, compared to what other gas producing nations were receiving. He said that renegotiation is a reasonable demand because the T&T people deserve to “get more than crumbs that fall of the table”.
Even if illegality is what is necessary, commentators, including Attorney-at-law Christopher Ram and the Transparency Institute Guyana Initiative (TIGI), have posited that the contract for Guyana’s Stabroek concession is riddled with illegalities.
But while the State Assets Recovery Agency (SARA) investigates the circumstances surrounding the awards of the Canje and Kaieteur concessions, SARA’s Special Assistant Eric Phillips said that the agency is not investigating the Stabroek concession, despite the controversy surrounding it.

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