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Opposition Leader not in favour of getting Guyana a better deal from ExxonMobil
The People’s Progressive Party (PPP) will not seek a renegotiation of the Production Sharing Agreement (PSA) for the Stabroek Block, if it wins the March 2, 2020 General election, despite its leader, Bharrat Jagdeo, acknowledging that the provisions held therein, are below industry standards.
Opposition Leader, Bharrat Jagdeo
Gaping loopholes have been pointed out in the contract, which would amount to significant revenue loss to the State, if they are not rectified. As if that wasn’t daunting enough, several provisions have even been alleged to be illegal.
Jagdeo yesterday fielded questions about the prospect of renegotiation at his Church Street office.
The contract allows for its own renegotiation, as long as the contractor grants prior consent. Typically, ExxonMobil wouldn’t give such consent, as it has waxed about the sanctity of contracts. Yet, Energy Advisor Anthony Paul participated in a segment of Guyana’s Oil & You on Kaieteur Radio, where he explained that there are ways in which a company like ExxonMobil can be convinced to sit down and revisit some of the contract’s provisions with the Government.
One of those is the point at which Government embarks on an approval process for their field development plans.
“Guyana is making discovery after discovery. And each oil field has to be developed by the operator. But the company has to submit a plan on how it will go about doing this. This plan requires approval from government. Now that approval process allows the Government of Guyana to pause the clock and say, ‘Let’s think about this and see how we do this in Guyana’s best interest,” Paul had said.
He is adamant that that is one of the mechanisms Guyana can use to claw back value from the deals that have been criticised as lopsided.
In this regard, Paul said that Government has a responsibility to be open to advice, and to lend support to those trying to assist by giving them information they can use.
Pointed to Paul’s statement, Jagdeo still did not budge. He said that a PPP Government would seek renegotiation for any other contract, but that they will not treat the controversial Stabroek PSA the same way. For that agreement, he said that a PPP government would look at rigid auditing of costs and good contract management. He believes that that’s enough to claw back enough value for Guyana.
Meanwhile, First Oil is slated to come up for Christmas, and Guyana is set to receive its first million barrels by February. The losses caused by the gaping loopholes in this controversial contract could rob the Guyanese people of quite a lot of value, since the current Government has also towed the same line as the Opposition; that they will not seek its renegotiation.
However, several small parties have been launched, and one of them – Change Guyana – has indicated that contract renegotiation is a must.
Prime Ministerial Candidate of Change Guyana, Nigel Hinds, is quoted as saying “The ambiguous oil production sharing agreements that have extremely low royalties for Guyana, is a major cause for concern…”
Hinds said that, “contract renegotiation for a fair share of oil benefits to the Guyanese people is absolutely needed.”
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