Minister Bharrat admits Exxon contract lopsided

Jul 23, 2021 News

– Says local content will pick up the slack

Kaieteur News – Minister of Natural Resources, Vickram Bharrat, yesterday admitted that the Stabroek Block Production Sharing Agreement (PSA) is lopsided; that its terms do not give the Government as much benefit as it would have hoped.

Minister of Natural Resources, Vickram Bharrat.

The Minister made these comments during a forum at the office of the Guyana Oil and Gas Energy
Chamber in Georgetown. The Chamber launched its training centre yesterday at its Middle Street office to educate stakeholders about the oil & gas industry. Minister within the Ministry of Public Works, Deodat Indar, and Senior Petroleum Coordinator at the Ministry of Natural Resources, Bobby Gossai Jr., also attended.
They all made remarks about the importance of local content, which the Government expects to claw back the value lost from the lopsided PSA.
“As a government, we are open to partnership with any individual organisation or agency that shares the view that Guyanese must benefit from the sector,” Bharrat said. “And how do we benefit as Guyanese from the sector? Of course, through a strong local content policy. Of course, we have a PSA that is not bringing the kind of benefits that we would have liked as a nation…”
His colleague, Indar, said, “With the current construct of the ExxonMobil contract, 75% of the money spent in any calendar year, there is a cap on it for cost oil. How do you benefit from that? That is where the local content element comes in.”
He said apart from the government take and money that will flow back into the economy, the money spent by the oil companies, for which cost recovery is capped at 75%, is money spent in the private sector.
“What you have to understand is, that means that is a lot of money,” the Minister said, urging local businesses to grab up a slice of the cake.
The Minister’s statements come after weeks of sustained protests by Kaieteur News and Guyanese home and abroad, for a better deal. The protests build on years of exposes, and advocacy by the free press for a better deal for Guyana.
Former Petroleum Advisor to the Government, Dr. Jan Mangal, in 2020 addressed the attempt by the People’s Progressive Party/Civic (PPP/C) Government to use local content as a substitute for a fair deal. The petroleum consultant had said on Kaieteur Radio that while local content is important, it cannot claw back all of the value lost from the lopsided Stabroek Block PSA. Dr. Mangal had said that local content is peanuts compared to the prosperity Guyana could get from a fair deal.

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