‘Time for better terms’ …Ramjattan throws supports behind renegotiation of Exxon contract

Aug 15, 2022 News

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By Davina Bagot                                                                                                                            

Kaieteur News- Leader of the Alliance For Change (AFC), Khemraj Ramjattan- a former  fierce defender of the lopsided 2016 oil contract signed under the Coalition administration has now joined the call for a renegotiation of the deal, citing that the lessons learnt from the sector has proven the need for the country to secure better terms.

Ramjattan in an exclusive interview with this publication on Sunday admitted that the former administration erred by agreeing to the terms included in the contract, but insisted that the then government was pressed to make a decision that could serve as a new revenue generation stream, as the other traditional sectors were not performing well at the time. “Sugar was eating up our treasury’s money. What do you do? You need a brand new revenue stream… although it was an imperfect decision,” the former Minister of Public Security admitted.

It was the AFC’s Raphael Trotman, former Minister of Natural Resources that entered into the agreement on behalf of Guyana. On Saturday, Ramjattan attended a consultation hosted in the US, where he attached his signature to a document in support of renegotiating the contract. To this end, he explained, “My reasoning is that they are saying that it was a bad contract and the new government is indicating, or since it was in Opposition, that it would renegotiate the contract. I would be one of the first Parliamentarians to say if the new government here is going to renegotiate a better contract, out of the one my government signed, I am in support of that.”

Ramjattan pointed out that even though the People’s Progressive Party Civic (PPP/C) promised to renegotiate the Production Sharing Agreement (PSA) with ExxonMobil in its Manifesto, they have failed to keep their word. “I am not seeing them doing any renegotiation so they were lying to us and on that score I would propose that they continue talking to Exxon for a better deal and that is what I support. If they can get a better deal by the process of renegotiation, every single Guyanese will support it.”

While the AFC Leader is in support of bringing the American oil giant to the table, he noted that he would be astonished if the other members of the Opposition do not agree with this position of seeking greater benefits for Guyanese. He was keen to note, “My personal view is that we should support the government in any of its renegotiating processes for a better deal, not for a worse deal because we notice that they have already worsened the deal by moving out the strongest characters that we could’ve put in the Environmental Protection Agency to deal with Exxon and that is why we have the (produced) water going back into the ocean, flaring continues and a whole host of other things like no unlimited liability coverage, as he (former EPA head Vincent Adams) was arguing for, and so it is important that this worsened situation does not continue, but the renegotiation for a better deal is certainly something I would support, and that is why is I did what I did at that conference.”

While he repeated his support for any renegotiation sought by the PPP, the Leader was asked specifically if he would seek to bring back ExxonMobil to the table, should the AFC be voted to govern Guyana, when he said, “Of course, of course! C’mon, when we signed the deal as we did, I am cert

ain that all the implications and the environmental impacts like to the fisheries and a whole host of other things we were somewhat uncertain about and when, you have to be honest and acknowledge that there might be implications in relation to seismic testing and those guns that they hit the sea bed with might affect the fishes and the water that they are pouring in will also affect the fishes.”

He went on to explain, “We have been led (to believe) that that is not going to be environmental impacts to that so of course why not. Now that we are getting it more and more as any new development will have new challenges, we have to ensure that these new challenges are met by talking to Exxon, renegotiating and signing a better deal in the future.” The AFC head said that “honest governments” upon realizing its wrongs would seek to change those.

Exxon shoots down need for renegotiation

In an interview with Mikhail Rodrigues, popularly known as the Guyanese Critic on Sunday, the ExxonMobil Guyana President, Alistair Routledge shot down the need for Guyana to renegotiate the lopsided deal, in which the oil company enjoys excessive tax waivers, while paying Guyana a mere two percent royalty, all without full liability coverage.

Routledge in responding to the question of considering a renegotiation of the oil contract said, “The business we are in is we don’t know what’s coming or what’s in the corner. It may look great today but I would say we kind of made it look easy so far. A lot of the resource that we found is going to be more difficult to develop. The return on those won’t be as good as the Liza Field. The first Field that we found was the best resource that we found in the Stabroek Block. That was where we started.”

He went on to explain that so far, the reservoirs have not been as lucrative. At the same time, the high price of oil on the global market “will almost certainly fall” which means that the business must be “robust and durable” for all stakeholders to allow

them to continue investing in the production of Guyana’s oil and gas resources.

The 2016 PSA

Activists in Guyana have been lobbying for changes to be made to the 2016 PSA as Guyana receives a mere two percent royalty for its sweet light crude and settled for 50 percent profit sharing, after Exxon takes 75 percent of the earnings to clear its expenses.

The deal that the oil company often brags about to its shareholders, also forces Guyanese to pay their share of taxes, amounting to millions of US dollars each year. This figure is likely to further balloon as more operations come on stream.

In addition, the country is allowing ExxonMobil to operate offshore without full liability coverage in the event of an oil spill, which means that the risk is borne by Guyana. Another key provision that is lacking in the document is ring-fencing provision, which would avoid the oil company from using the petroleum revenue in one field to cover for expenses in another.

 

 

 

 

 

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