Exxon contract has clause to renegotiate

May 30, 2021 News

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…but provision mandates ‘only with written agreement’ by all parties

“Govt. still owes the people of Guyana the obligation to renegotiate that contract and don’t let anybody tell you that contract is not renegotiable.”

Kaieteur News – The Production Sharing Agreement (PSA) with the lead operator of the Stabroek Block — ExxonMobil — and their partners, Hess Corporation Inc. and China National Offshore Oil Company (CNOOC), provides that the heavily criticised agreement can in fact be renegotiated.

The provision obtains at Article 13.2 of the PSA but comes with the caveat — the renegotiations and happens only with a signed written agreement between all of the parties involved.According to that provision in the PSA, commonly referred to as the contract, “This Agreement shall not be amended or modified in respect except by written agreement entered into by all the parties which shall state the date upon which the amendment or modifications shall become effective.”
Former Director of the Environmental Protection Agency (EPA), Dr. Vincent Adams, during a radio interview on Friday, pointed to the provisions and suggested the fact it exists in the PSA, is indicative of the fact it can be renegotiated.
According to Dr. Adams, “since way back in 2016, I was on the front page of the newspapers calling for a renegotiation of the contract.”

He was adamant, “nothing has changed my mind.” In fact, he posits, “to me anyway the government still owes the people of Guyana the obligation to renegotiate that contract and don’t let anybody tell you that contract is not renegotiable.”The former EPA Director insists the contract spells out provision for renegotiations and said, “If it was not the intention that it can’t be renegotiated, that clause would not be there.
He reminded nonetheless of the caveat calling for a written agreement by all parties involved to say, “…the parties must have to agree to renegotiate, I would love to see government tell Exxon(Mobil) we want renegotiation.”
The matter of renegotiating the agreement with ExxonMobil has been available by the David Granger administration on the advice of his then Petroleum Advisor, Dr. Jan Mangal, much to the consternation of many within his fold.

According to Dr. Adams, “when I hear people say we can’t renegotiate, that’s absolute nonsense.”
He was adamant, “it’s in there, the clause was put in there because there’s a possibility that it could be renegotiated, don’t let anybody fool you and tell you that it can’t be renegotiated because we sign it.”
A number of key political figureheads from across the administrations have in the past-adumbrated varying positions when it comes to the renegotiation of the PSA with ExxonMobil’s Guyana Subsidiary, Esso Exploration and Production Guyana Limited (EEPGL), and its partners.

 

In February last year, the Former Minister of Natural Resources, Raphael Trotman, under whose auspices the 2016 PSA was inked, said “The Government of Guyana believes in the sanctity of contracts and given all circumstances, sees no justification to the suggestion that the 2016 Petroleum Agreement is an improper contract.”
At the time, former President, David Granger, was of the view “once international contracts have been engaged in, there is no question of removal or renegotiation of those contracts.”

 

He had adumbrated the position, “we will move forward and ensure that we continue to get the best advice before we engage in any other negotiations.”
His second in command at the time, Joseph Harmon—now opposition leader—had told the local press “let me say from the outset that when we came into office, we made it clear that we respect the sanctity of contracts.”
Former President now Vice President of the People’s Progressive Party/Civic (PPP/C) in the Irfaan Ali administration, Dr. Bharrat Jagdeo, is on record saying contracts are sacrosanct, must be respected and that the US Oil Exploration Company, ExxonMobil, has a right to make money on its investment.
On the sidelines of a January 2020 campaign rally at Anna Regina in Essequibo, Region Three, Reuters had reported that President Ali informed that an Ali-led PPP/C government would “keep the Exxon contract intact” but review and push for renegotiation of others signed after 2015.
The article quoted Ali as saying that Exxon was a pioneer investor here and “a different case” which he would not look at for a renegotiation, should he become president. “Exxon was a pioneering investment,” Reuters quoted Ali as saying. “But those that came after that time they were not pioneering, so they have to be examined in totality,” he added.
Minister of Culture Youth and Sport, Attorney-at-law Charles Ramson Jnr., who had taken a break as a parliamentarian to pursue oil and gas studies, had also voiced the position he will not advise his party to renegotiate the Stabroek PSA because of “contract sanctity.”
Senior Minister within the Office of the President with responsibility for Finance, Dr. Ashni Singh, has in the past skirted the question of whether Guyana was getting a fair share of its revenue from its oil deals, to instead say, that what Guyana gets is already dictated by the contract and that, “We have to work with them and to make the best of them.”

 

 

 

 

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