Guyana has strong case to renegotiate Exxon's deal - Chatham House Associate Fellow

Guyana has strong case to renegotiate Exxon’s deal – Chatham House Associate Fellow

Feb 16, 2020 News

By Kiana Wilburg

When the Government of Guyana engaged in negotiations with ExxonMobil in 2016 for the Stabroek Block licence, it had a lot of power in its grasp but perhaps, did not realise it. Since then, Chatham House Associate Fellow, Dr. Valerie Marcel, says Guyana’s power has grown significantly.

Chatham House Associate Fellow, Dr. Valerie Marcel

In fact, the industry expert says with this kind of power, it gives Guyana a strong case for renegotiation. The Petroleum Governance academic made the foregoing remarks, among others, during a recent interview on Kaieteur Radio’s programme, “Guyana’s Oil and You.” There, she was asked to say if Guyana has a good case for amending the terms of the deal given the impressive discoveries to date.
Dr. Marcel said, “I think there is a strong case for renegotiation because it’s important that the deal is fair and that it’s favourable enough to both parties to endure for a very long time because, you know, the oil project lasts for 25 years. So if it’s too unfair it becomes well, you know, like a political football and it becomes very difficult for the deal to survive.”
Even as she agreed that Guyana does have grounds for renegotiating the deal, Dr. Marcel was quite careful to note that she would not recommend “unilateral renegotiation.” In this regard, the Industry Expert explained, “When we say renegotiation, it’s basically coming back to the table. So every time an oil company comes to the government to say ‘Well you know, you we need an extension for this and this reason’ or ‘We haven’t gotten the permits, we need some more time, we need to alter terms to compensate for this,’ …that is not called renegotiation but it is renegotiation.”
Dr. Marcel added, “And that’s the opportunity for the government to say ‘Well while you’re here, get comfortable (and) let’s talk about what kind of modifications we would like to see to the contract so that it is mutually beneficial.’ And I think these are long term relationships, you don’t want them to be adversarial…”
At the end of the day, the Chatham House Associate Fellow said there is still scope for being assertive about what sort of minimum requirements the leaders of the day want to see in the agreement.