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The sanctity of the PSA will be maintained – the power of “paypa”
DEAR EDITOR,
An article appearing in KN on August 9th, captioned – “President Granger, energy department sending mixed signals on review of Exxon deal for Stabroek block”, is somewhat incomprehensible to me.
While the article revealed what most of the reading public is unaware of, myself included – that the PSA with Exxon is up for review or renewal every four years – it leaves more questions than answers.
My prior understanding was that the Petroleum Prospecting and Production License, the document signed by Exxon and President Janet Jagan somewhere around 1999 -2000, was the document that was up for renewal every four years.
My understanding was that when the Coalition entered into a full-blown PSA with Exxon after Exxon found oil, the PSA obliterated the Petroleum Prospecting and Production License through something called a “bridging deed”.
My understanding of “sanctity of contract” means that the contract cannot be touched or changed. Why was sanctity of contract mentioned so often when the call to renegotiate the PSA was rife? How does that coincide with a chance to change what seems internationally unacceptable in our PSA with Exxon “when the contract comes up for review in October 2020”?
Somehow the people should have been told that changes could have occurred in the next 4-year cycle from 2016 to 2020 – the time the Stabroek block contractors were slated to start production. The review next year will induce conspiracy theorists to examine the aftermath of the No-confidence motion (NCM) in the context of corporate greed and deed around the world!
The article stated that the head of the Energy Department was asked if Guyana will have a “special consulting team at its side for the crucial review”. Dr. Bynoe’s response was, “And so, whatever we do, as we have been on record as saying, we seek to hire third parties to assist us as we build up that national capacity, and that modus operandi is not likely to change.” What modus operandi is not likely to change! Is it the ones written in the PSA or is it the plans of the energy department? Bynoe’s statement is a bit too vague to make a clear call.
“Mixed signals” used in the caption, is not in sync with what CEO John Hess said when asked at a conference in NY if he felt that his company would continue to benefit from the lopsided contract without any tweaks for the anticipated decades of the duration of the project. Hess said that the license holders were assured by president Granger and the PPP in private and public that both sides will honour the existing contract.
Hess added; “We also have Exxon as our partner and CNOOC, which I think helps us in ensuring the Production Sharing Contract is followed.” The mechanism of the corporate world expressed!
With both Coalition and PPP leaders promising to honour the PSA, what Dr. Bynoe is pontificating could be better understood from a Guyanese context. I can clearly recall that in the past, many high ranking police officers who went to run some division, would always be chanting about they were going to straighten things. Two months after, by the time they made the right connections and, in local parlance, the “paypa” begins to pass, you had to wonder if they were transferred – total silence, the same old routine!
With the review of the contract coming up, the ”modus operandi” is to make some noise to get the attention of the right people. This position will force the right people to, in local parlance, “speak”. The “paypa” would more than likely be passed and the sanctity of contract for the 6 billion barrels would be maintained.
The energy department may hire technical people to have better contracts in the future, but for now the contractors of the Stabroek block will have their gift as promised by the two Leviathans. The big question! Is there anything significant outside of the Stabroek block?
Rudolph Singh
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