Demanding a better deal for Stabroek Block was not priority for Govt.

Demanding a better deal for Stabroek Block was not priority for Govt. – Int’l law firm says

Feb 07, 2020 News

A report commissioned by Cabinet itself, reportedly in response to the Global Witness report, has found that the negotiation of improved terms for Guyana in the 2016 agreement was not a priority for the Government of Guyana. Those negotiations were led, on the Government’s side, by the Minister of Natural Resources, Raphael Trotman.
Hired in September last to prepare a report on the circumstances surrounding the signing of the 2016 Stabroek license, the British firm Clyde and Co had been provided with the drafts of the 2016 agreement exchanged between the Ministry of Natural Resources and Exxon’s subsidiary, Esso Exploration and Production Guyana Limited (EEPGL).
The currently unreleased report states that Clyde and Co analysed the points of agreement raised by each side.
Government did make efforts to propose improved terms, but the report posited that the consortium was not receptive of its proposals. Yet, Government wanted to get the negotiations over with, in a short period.
Clyde and Co found that the negotiations were limited, taking place over just the course of a month.
While the Government could have approached the situation differently, through extensive negotiations on the agreement’s terms with a view of improving them, the authors of the report wrote “such an approach was not in the forefront of the Government’s mind.”
Because of that, the Global Witness report now sees Guyana losing US$55B over the life of the agreement. It has urged a renegotiation.
What the Government prioritised, according to Clyde and Co, was ensuring a continuity of its relationship with the Contractor consortium, ExxonMobil, Hess and CNOOC.
As companies originating from two of the world’s most influential countries – China and the US – Government reportedly saw the companies as assets while it defended itself from Venezuela’s claim over two-thirds of its territory.
It also worried that if it took a more aggressive approach, it would risk the oil companies rejecting the revised terms and relinquishing the acreage outside the discovery areas in June 2018.
According to the report, the Government figured that Exxon would remain an operator in Guyana for a very long time, once exploration of the Stabroek Block turned out to be successful.
Government also reportedly considered that Exxon had already held an interest in the Stabroek Block for almost two decades, and had stayed through the territorial controversies and an oil price crash which occurred in 2014, despite the large investment costs associated with the industry.
On the other hand, Global Witness posited that, though protecting Guyana’s national interest is a fair consideration, it was not a justifiable reason to fast-track negotiations, especially at a time when Guyana could have waited for the details of the second Liza field discovery and strengthened its negotiating position. This is also buttressed by the fact that Government, according to Global Witness, rejected expert advice in multiple instances.

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Demanding a better deal for Stabroek Block was not priority for Govt. – Int’l law firm says

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Demanding a better deal for Stabroek Block was not priority for Govt. – Int’l law firm says

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