Seventeen reasons why the ExxonMobil contract should be renegotiated

Jun 27, 2022 Letters

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Dear Editor,

In my opinion, this contract should be considered null and void for the following interim reasons:
1) This contract was not made in good faith, good intention, is biased and is not consistent with minimum international contracting requirements, practice, guidelines, procedures and laws.
2) This contract is a production sharing contract/royalty (PSA), where Guyana is technically a partner, a beneficiary, and must have a full time staff/inspection for verification of quantities/quality of the product, all resources, all works and costs, from the upstream to midstream to downstream. The fact that this is not in the contract is enough to legally terminate this contract. This will be construed as a deliberate attempt to hood wink the reasonable share of Guyana.
3) Further, with item two above, Exxon stipulated that the government must give a number of days of notice for inspection. This is enough to pronounce this contract null and void. Was a deliberate act.
4) The scope of work was not well defined, into unit rates, lump sum, variations, extra work, estimated quantities, a bill of quantities, resources, etc. Items of work must be quantified and qualified.
5) The contract did not itemise nor clearly generalise activities with resources and estimated cost
6) The general conditions and special conditions were not elaborated minimally, to give an ample picture of the activities of the contract, as stated above, this appear to be deliberate.
7) The government must have the authority to verify the activity of work, resources and cost per activity, and all expenditures, give an approval/no objection, an inspection team.
8) The contract did not state that the government inspection team must meet certain qualifications/criteria, training, organisation chart, metre calibration and reading, number of inspection staff at a time on site so that they will not be an obstruction to works, health and safety issue, etc.
9) The exploration cost is the cost of Exxon and not Guyana. What if no oil was found; where would Guyana get the money to pay? At least a negotiated share of the cost now that the oil is found. Not good faith/intention by Exxon
10) Exxon aided and abetted, the government to conceal the US$18m signature bonus.
11) Bonuses and gifts by a contractor, to institution or government, is seen as a conflict of interest, is not a good business practice, because it has the tendency to tie the conscience, under the table.
12) The environmental impact of oil exploration/refining, etc., was not professional and well defined as a minimum. Exxon knows it too well. Guyana is in trouble with this contract. An oil spill/contaminants can cost Guyana more than the total oil profit, if the capping of the auger holes is not done properly and pollutants start after Exxon is gone, it goes to other countries. There is not only a large cost to deal with hydrocarbons contaminants, oil spill as an example, contaminants will be transported to land, where non porous containers is required temporarily to hold, then to incinerators, then to clarifiers and must be done under protection for the air and the high water table of Guyana.
13) Exxon past record of doing business with integrity leave much to be desired.
14) The taxation, local content was not well defined, leave the government so opened, that this is not a contract.
15) In layman’s terms, a contract must have activities/scope of works, resources, legal descriptions, costs/estimated costs, so that when the quality/quantity, costs of the undertakings are assessed and verified, you have a basis to compare and evaluate. The 4 m’s(man, machine, material, money).
16) The airfare on the American Airline recently, tells the story of a biased contract, not binding.
17) The PPP is not saying much, the Coalition is tightlipped, despite the demand of the public not only to see the contract, but to renegotiate the contract. This is sending a message to the public that the politicians PPP/Coalition conscience is under the table, as the track record of Exxon would suggest.
Editor, it is the time for the PPP and Coalition to have a committee, comprising, 1 rep PPP, 1 rep Coalition, business group 1, civil society 1, 1 from smaller party and retain legal and technical minds in oil and oil contracts. I would like to be the chair of this team at no cost other than expenses, for the Guyanese people. It is my job as a contract manager, an engineer, and experienced taking material from the earth, process/refine, to a consumable product. God bless and guide the human minds/actions for you lovely Guyanese people.

Sincerely,
Joe Persaud

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