Government must not compromise on review of the oil contract

Sep 08, 2020 Letters

Dear Editor,

The four-column headline, “Delays could risk long-term value of Guyana’s oil” in the state-owned paper is wrong-headed. It reads like the work of a clever PR-person, produced and paid for by the oil company. The fact that it is published in the state-owned paper suggests collusion, and worse, a sellout.
The arguments made in the article can be summarized as follows:
(1) Demand for Oil will decline in the next few decades – so take whatever little you get now. The average reader can readily recognize the false reasoning here
(2) Long-term delays are risky. No guarantee Oil price 10-20 years from now will be higher. False reasoning again.
(3) Foreign anti-oil activists are not agitating in the best interests of Guyana.
Global Witness (GW) is not anti-oil company, nor is it against the best interests of Guyana. The oil contract is grossly unfair. How does Suriname’s contract match up with Guyana’s: (a) 2% royalty for Guyana vs. 6.25 % for Suriname; (b) Guyana’s Cost Recovery 75% vs. 60% for Suriname (c) Oil Company pays 36% Corporate Income tax to govt of Suriname vs. zero percent for Guyana. GW’s only interest is to help Guyana get a fair contract, and that is the only reason, albeit a sensible one, why GW urges GoG to put Payara on hold pending a review/renegotiation of the Oil Contract.
OGGN (Oil and Gas Network) is asking the government of Guyana to formally ask ExxonMobil to come back to the table to review these items of gross unfairness – and for both parties to try to make it fairer. What is so wrong with this? The oil company could wave its contract and say: “Sorry. We have a signed contract. Sanctity of Contracts.” The ruling party could then say it tried but did not succeed.
To flatly refuse to even ask the oil company for a review of the contract can only be perceived as a monumental sellout, so soon after receiving a strong mandate from the Guyanese electorate.
Contracts are litigated in court everyday around the world. Many are invalidated due to deficiencies in the contract. Guyana’s oil contract contains a stability clause prohibiting the parliament from ever passing any tax laws – even for the next 30-years that could potentially impact the company. Chris Ram has cited an Israeli legal precedent that directly challenges the stability clause. Guyana’s contract grants 600 oil blocks to the company. This is flatly illegal because the Law limits the number to 60.
The major point of the article in the State-owned paper is “Time is of the essence”. Guyanese people are neither fools nor idiots. They know that the two parties can gather around the table with their lawyers, accountants and mathematicians and resolve the issues surrounding this unfair contract in a matter of days – so that the Payara approval can still be issued before the end of September. For the GoG to lack the will to simply ask for a contract review must seem like a terrible betrayal.
Global Witness has cited facts to show that Minister Trotman may have been compromised when he signed the contract. The new Irfaan Ali govt. must not be another kompromat.
Yours truly,
Mike Persaud

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