Guyana more than capable of Parliamentary debates on oil deals before signing – University of Houston Instructor

Mar 01, 2020 News

By Kiana Wilburg

When the ExxonMobil Production Sharing Agreement (PSA) for the Stabroek Block was revised in 2016, industry experts were adamant that certain fiscal terms, such as the meager two percent royalty and the payment of the Operator’s taxes out of the nation’s share of profit oil, were not in Guyana’s best interest.

University of Houston Instructor, Tom Mitro

In addition, industry stakeholders contended that the lack of transparency about who was negotiating on the nation’s behalf contributed to the nation being saddled with a deal that sees ExxonMobil walking away with the lion’s share of Guyana’s resources.
To ensure that these mistakes are not repeated, University of Houston Instructor, Tom Mitro, said he would recommend public debates are conducted before signing agreements.
During an exclusive interview with Kaieteur Radio on its show, Guyana’s Oil and You, Mitro firmly asserted, “Have a discussion within Parliament (on these deals). There are several countries where this happens and I am sure Guyana is more than capable of doing this.
“I look at these agreements as being no different from a tax law or customs law, and I don’t believe that any country would enact laws without making them public and having them publically debated.”
The University of Houston Instructor said that, indeed, there could be challenges in bringing these agreements before the table for a national discussion.
He said that it is a critical exercise while noting his belief that Exxon, and other companies would want to have confidence that the public understands the issues and supports what is being agreed to.
Further to the point of parliamentary debates, Mitro noted the importance of Guyana having the right experts to provide guidance on oil deals.
In this regard, the industry expert said, “Oil companies spend a lot of money on getting the international expertise and any that is in the country tends to go to the company too. It is just a natural thing that happens. The government therefore really needs to ensure it has the expertise for these discussions so that they too can be informed about what should and should not enter the deal.”
Mitro said that Guyana should not only arm itself with petroleum engineers, but also economists who understand how to evaluate the markets, financial experts who can identify areas for revenue leakage in the agreements, lawyers for contentious provisions, and geo-scientists who know the reserves.
Another important part of ensuring that Guyana gets the best deals, Mitro said, is by having a clear definition of roles within the government and making sure it is clear which agencies and ministries are involved.
Mitro said, “I think that is helpful. Many external observers around the world for various countries have said that having one Minister or just one individual in charge of petroleum policy isn’t always the best.” On this note, the industry expert concluded that it is always better to have a variety of voices at the table for making final decisions.