Call Exxon’s bluff and demand renegotiation – Vincent Adams

Jan 18, 2021 News

---

– They can’t survive without Guyana

By Shikema Dey

Kaieteur News – Former Head of the Environmental Protection Agency (EPA), Dr. Vincent Adams, is of the firm conviction that Guyana needs to stop being intimidated by petro giant ExxonMobil and demand favorable terms as the American multinational’s standing in the future is highly dependent on the successful outcome of its projects here.
During a live debate on Guyana’s Oil Priorities for 2021 facilitated by the Moray House Trust, Dr. Adams was keen to highlight that Guyana serves as Exxon’s lifeline and ‘cash cow’ hence he is a bit baffled as to why the government is hesitant to renegotiate the lopsided Stabroek Block contract.

“From day one, I felt that the contract should have been renegotiated. I am still baffled as to why we are so apprehensive to approach Exxon to revise that contract since despite what may be the impression out there, nothing in the agreement says that ‘thou shall not renegotiate’. As a matter of fact, the contract specifically allows for renegotiation except under the condition of consent of both parties,” Adams relayed in his presentation.
But despite these provisions, Dr. Adams who has been in the industry for most of his professional life, noted that the government has still approached the subject with reluctance.
While Exxon had threatened September last to shift investments elsewhere if it did not get a favourable outcome during negotiations with the Payara permit, Adams stated that Guyana can merely call this “bluff” and open its doors to the long list of oil companies eager to get their hands on the sweet crude found offshore.
“Unfortunately, I don’t think we understand the fortune of leverage we have here. Exxon needs us more than we need them especially now that they are facing some real financial challenges. They cannot survive without Guyana…”
But Adams would be the first to make this proclamation regarding ExxonMobil. In fact, President of the Centre for International Environmental Law (CIEL), Mr. Carrol Muffett has categorically stated that ExxonMobil’s comment indicates how scared it actually is.
During a previous interview, he had expressed the view that Exxon’s future was hanging in the balance even before the COVID-19 pandemic hit while adding that the crisis only exacerbated that state of affairs. He was keen to note that the company’s financial health was dwindling after it lost more than 50 percent of its value in the last decade. Added to that, he said that the company was losing money in the parts of its portfolio that it had long term growth opportunities and projections.
With the foregoing factors, among others in mind, Muffett had said that Exxon’s without question relies heavily on Guyana and the Stabroek Block PSA for its future success as no other country provides more lucrative benefits for the taking. He like Dr. Adams agreed that Guyana was and remains in a position to renegotiate its lopsided deal.
During the virtual debate held on Saturday, Dr. Adams was keen to note that this topic of renegotiation is one that should not be made into a political spat as both the governing People’s Progressive Party Civic (PPP/C) and the previous A Partnership For National Unity + Alliance For Change (APNU+AFC) regime are equally to blame for the lopsided provisions in the Stabroek Block contract.
Further to his passionate arguments, Dr. Adams said he welcomed the move by shadow Oil and Gas Minister, David Patterson to support the governing administration if they decide to renegotiate the contract.
Dr. Adams was also keen to note that the EPA had proved that renegotiation is possible if you push for it.
A prime example of this is when the agency ensured that the Liza Phase Two environmental permit handed to Esso Exploration and Production Guyana Limited (EEPGL) included a provision committing the parent company, ExxonMobil, to accepting unlimited liability for all costs related to oil spills or any other such incident.
That provision was a clear departure from what is provided for in the Production Sharing Agreement for the Stabroek Block, which governs Liza Phase Two and other projects.
“…We thought it was the right thing to do for the country and Exxon conceded,” he said.
According to Dr. Adams, Guyana needs to understand that Exxon is not “coming to do us a favor”. The former EPA Head said that the country also needs to bear in mind that whatever venture Exxon pursues here, it must be done in the best interest of Guyana.
“They are gonna come and extract the oil in 20 years and they are gone. They could care less about what happens to us afterwards and this is what we need to understand. We welcome foreign investors, we want them but we also have to think about what is gonna happen after they leave,” he concluded.

---

---