Exxon Guyana Head insults Guyanese claiming Stabroek Block deal is best contract country has ever had

Exxon Guyana Head insults Guyanese claiming Stabroek Block deal is best contract country has ever had – KN Publisher

Aug 17, 2022 News

Kaieteur News – In spite of the barrage of criticisms the Stabroek Block Production Sharing Agreement (PSA) has faced from members of Government and a host of international organisations and stakeholders, ExxonMobil Guyana insists that the country got a good deal in 2016.

In fact, Head of Exxon’s subsidiary, Esso Exploration and Production Guyana Limited (EEPGL), Alistair Routledge recently noted that “this is the best contract the country has ever had…”

Exxon Mobil Guyana Head, Alistair Routledge

During a recent discourse on Social Media Platform, The Guyanese Critic, Routledge said he disagrees with comments that the country got a bad contract. “It’s far from the truth, this is the best contract the country has ever had, the most valuable contract for the country. I mean it is already delivering unprecedented revenues to the country into the Natural Resource Fund and it will deliver huge amounts more in the future. We’re really only just getting going.”

Kaieteur News Publisher, Glenn Lall

Expounding on what qualifies the 2016 deal to be the best, Routledge said, “Well you have to go back to when the contract was agreed. At that time, we knew very little about the oil and gas resource in the Stabroek Block. There was a huge risk to investment under the way this contract is structured. The investors take all the financial risk; they make all the investments upfront. If they never earn enough money to pay back those costs they have to write those costs off. The country never has to invest money in this; so that’s the first thing that’s important to remember is at the time of signing of the contract we didn’t know much. It was still extremely high risk…at the time we knew very little. We had one well. There was a success in 2015 when we signed the 2016 deal.”

Though he was not in Guyana at the time of the signing of the 2016 deal, Routledge said it is his understanding that the normal practice governing of negotiations took place while alluding that the APNU+AFC regime was under no pressure. He said the two parties negotiated to the best that they felt comfortable doing. The Exxon Guyana head added, “I asked the people that were involved at the time before I came here, they said ‘we we’ve made the best offer that we could.’ We improved on the previous terms and conditions. It was the best offer that we were willing and able to make that would compete for investment in the future.”

AN INSULT

Kaieteur News (KN) Publisher, Glenn Lall, upon noting the foregoing statements said it can only be described as a putrid insult to Guyanese.

“When I hear these things, honestly, I am enraged, the bile, the acid in my stomach raises to my throat, to tell these people don’t play these African and Asian games with us…To tell this nation that ‘this is the best contract the country has ever had’, is not only equivalent to whipping us on our backs but rubbing salt and pepper into the wounds. But I have a message for Mr. Routledge: We are not that dumb; we refuse to accept the garbage and filth you are trying to make us swallow.”

LOOPHOLES

Over the years, KN has published commentaries from Chartered Accountant, Christopher Ram; International Lawyer, Melinda Janki; former EPA Head, Vincent Adams; and Oil Expert, Tom Mitro, among others, on some of the damning provisions in the contract.

Stakeholders have flagged the fact that Guyana allows Exxon and partners to pay a paltry two percent royalty and recover it. They have also highlighted that no insurance policy from ExxonMobil Corporation and its subsidiary has been made public and thus far, there have been word-of-mouth assurances that EEPGL has coverage for up to US$600M per spill.

Critics have also lambasted authorities for allowing Exxon and partners to recover all interests taken on loans for the projects offshore. Best practices dictate that there should be a cap on these interests but Guyana has none.

Even Attorney General and Minister of Legal Affairs, Anil Nandlall, has also condemned the PSA, noting that it is the worst contract on the planet.

KN had also done an extensive review of 130 PSAs to better understand just how “unusual” Guyana’s provisions are. It turns out that Guyana’s is in a class of its own. It is the only one, which has more than a dozen odd provisions all in one place. For example, the PSA sees the government paying the contractor’s income tax out of the country’s share of the profits. However, none of the 130 PSAs examined shows this arrangement. Further, the Guyana-ExxonMobil PSA is the only one out of 130 contracts, which has no ring-fencing provisions to prevent costs of unsuccessful wells being carried over to that of successful wells.

There is also no sliding scale for royalty to increase as production improves.

And that is not all. Guyana’s PSA is the only one out of 130 that allows insurance premiums to be fully recovered as well as interest on loans and financing costs that are incurred by the contractors.

Contrary to what Routledge noted, Guyana pays for every aspect of Exxon’s operations through cost recovery.