Still no public consensus or release of new PSA as oil block auction approaches

Oct 02, 2022 News

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– Opposition says it will use all avenues to access new document

By Zena Henry

Kaieteur News – Given the raging debates regarding the lopsided Production Sharing Agreement (PSA) that Guyana currently has with ExxonMobil’s subsidiary Esso Exploration and Production Guyana Limited (EEPGL) and partners, it was thought that the Government would have by now commenced consultations, or made public, information on the new agreement to ensure stakeholders’ input for a more satisfactory share of the oil resources.

This has not been the case, and the parliamentary Opposition says it is concerned about what could be hidden in the new contract that the Government is yet to engage the Opposition, despite their request to be involved. Economist and Advisor to the Opposition Leader, Elson Low has expressed worry over the Government’s posture to not involve the Parliamentary Opposition in major decisions that directly impact constituents supporting both sides of the political divide. Low has called out the Government for sidelining the Opposition highlighting that their refusal to engage has been at the centre of many of the disputes facing the two sides of the House. With the bid round for the oil blocks expected before year end, Low said that the Opposition is keen on seeing the provisions of the Government given that they also have ideas on what the new agreement should look like.

Low said that “the fact that the new model PSA has not been released for public consultations, when we are only days away from the expected beginning of the oil block auction should fill Guyanese with suspicion and alarm.” He said that the Parliamentary Opposition would have demanded the release of the new PSA document over a month ago, but still there has been no information in this regard. He said that “similar to the passage of the Natural Resources Fund Act amendments, where there was no meaningful consultation, we are again seeing no effort by the government to engage with stakeholders during this process. Guyanese must ask why the secrecy,” the opposition advisor said. He questioned, “What is the Government hiding in this new PSA?”

Low charged that, “Given the debate that has surrounded the existing PSA, one would think that the Government would want to give stakeholders a chance to participate in the process of crafting a new one.” He noted, however, that “rest assured we will use various strategies to pursue this.” He added that the Opposition will be taking further actions in the near future to ensure its necessary contribution to the new oil resource sharing agreement.

It is expected that relinquished portions of five oil blocks will be part of the auction that will now be held in the fourth quarter of this year. Still accepting advice, and examining their approach to the auction, President Irfaan Ali had said that the bidding event was pushed back to ensure that the administration covers all its bases. While the Government has not yet stated which blocks are up for grabs, it is believed that the Kanuku, Corentyne, Demerara, Canje and the Kaieteur Blocks will be part of the auction, while no part of the prolific Stabroek Block would be included in the nation’s maiden bid round since the provisions of the 2016 contract only allows for 20 percent of the acreage to be relinquished after seven years. It means, therefore, that a portion of the oil-rich block would only be surrendered to the State until 2023.

Calls have gotten louder to have Guyanese involved in the auction despite, utterances that locals will be able to finance such endeavours. Calls have also been made to debar American oil giant, Exxon from the auction given their hold on the massive Stabroek Block and the belief of some that their involvement could mean the monopolizing of the state resource. Recently, Exxon said it was not sure whether it would be taking part in the auction, but based their decision to do so on the possibilities that the new PSA may provide.

The Government is actively considering also, the development of a national oil company, but the decision on that too had been delayed. President Ali said last month that his administration is still looking at the business model to allow a strategic partner to operate and manage the potential oil company and see what role it could play in the auction. The President had explained that since the announcement of the specific model of oil company, several expressions of interest have been received by the Government and one of the models he believes will benefit Guyana is one in which some oil blocks can be developed through a state company, “one in which the Government does not have management interest and does not play any part in managing, nor do we put any investment in but where Guyanese people are part of what comes out of the returns.”

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