T&T Prime Minister shows Guyana renegotiation is possible, in changed situations

Aug 28, 2020 News

– Gets more than crumbs for T&T’s oil assets

Prime Minister of Trinidad and Tobago, Keith Rowley, has never been shy about demanding that country’s fair share of its patrimony.

T&T Prime Minister, Keith Rowley

Under his stewardship, the island nation has renegotiated several agreements with oil companies to increase the country’s revenue share.
That country’s experiences serve as fair examples for Guyana, as it sets out to garner value from a lopsided agreement with oil major, ExxonMobil.
When Rowley came to Guyana in 2018, he gave this country valuable advice about renegotiation of contracts. Asked by this newspaper about Trinidad’s take on renegotiation, in the presence of former President David Granger, Rowley had stated: “We have respected the sanctity of contracts while not accepting that contracts are set in stone.”
He had stressed that as engagements between parties, contracts must be approached with goodwill, and that while contracts are supposed to encourage participation, they are also supposed to take into consideration, the fact that the market will change over time.
“Contracts reflect time, place and circumstances,” the Prime Minister had said.
At the time, Trinidad was at the negotiating table. But that isn’t the only time the country would renegotiate contracts.
In the following year, he went on to add more meat to his words by telling oil companies that the government has a role in ensuring that the people get “more than crumbs that fall off the table.”
The administration had found that there was a need to discuss better terms and conditions with Atlantic LNG, a liquefied natural gas company the National Gas Company of Trinidad & Tobago is a shareholder in.
It had noted the need for improved revenue for Trinidad and Tobago from LNG sales.
During an address to the T&T House, Energy Minister Franklin Khan had rubbished criticisms from the opposition that renegotiation would scare away investors, explaining that those criticisms were uninformed and that the Rowley administration had worked assiduously to maintain fruitful relationships with international players.
He had said that it was necessary to build a platform of mutual respect, “and an ability to sit in the same room as equals with these sophisticated multinational companies”.
In explaining the need for renegotiation last year, T&T Rowley said, “There’s a role for the government in ensuring that the people of Trinidad and Tobago, while being participants in this very lucrative business, get more than crumbs that fall off the table.”
Contrary to the criticisms of the political opposition, Prime Minister Rowley had expressed his pleasure at the fact that those in the industry were willing not to treat contracts “as cast in stone”, and Minister Khan had said that both Shell and BP had committed to substantial investment in the T&T industry.
Rowley had explained that it was necessary to up the government’s share, as the agreement had no longer provided a sufficient gain of value, compared to what other gas producing nations were receiving.
Following that renegotiation, T&T went on to renegotiate three more agreements with Atlantic LNG, a joint venture its National Gas Company is a shareholder in. These renegotiations meant that T&T would be on the receiving end of more than US$1B in revenue over the next few years.
In the case of Guyana, local and international commentators, as well as local newspapers have noted many provisions in the contract with ExxonMobil and its partners, Hess and Nexxen, which are lopsided and unfair. Global Witness found that the deal is so unfair that Guyana will lose US$55B over its lifetime.
Some aspects of the agreement were even noted to be illegal by some commentators. Both major parties have been urged to renegotiate the agreement, but both have resisted those calls.
The situation here has changed, as the people are becoming more aware of the value of their patrimony and the need to secure that value for themselves.
Claims that renegotiation would scare away investors have not held weight, as Guyana’s oil has been proven to be among the cheapest to produce in the world.
With oil companies describing Guyana’s patrimony as the jewels in their crowns, ExxonMobil and its partners are not going anywhere.

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