AFC ready to support PPP in renegotiating Exxon contract

Oct 08, 2022 News

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By Davina Bagot

Kaieteur News – Guyana’s third major political force, the Alliance For Change (AFC) party, is willing to stand with the People’s Progressive Party (PPP) to change the lopsided 2016 Production Sharing Agreement (PSA) with ExxonMobil.

During a Press Conference on Friday, the party’s Chairperson, Catherine Hughes explained that the group believes renegotiating the agreement should not be approached in an isolated manner but the country’s leaders should hold hands on the matter.

In response to a question by this publication, Hughes said, “the renegotiation of the contract should be considered in the same spirit with which we work together- Opposition and Government, we work together on issues that have to do with our border and as you know the border dispute and this is where we’ve said quite a few times that we are willing to support the Government in going to Exxon as Guyana – a unified Guyana – to look at how we renegotiate.”

Meanwhile, Leader of the AFC, Khemraj Ramjattan pointed out that the whopping 10 billion barrel increase in oil reserves in the rich Stabroek Block is more than enough reason to get the oil company back to the table.

“We have indicated, and I publicly have indicated that yes, indeed (we can renegotiate) because we understand the changed circumstances but more than that, the PPP when it was in Opposition had said that our agreement was so rotten that they will renegotiate. Did they fool all of us here? It would appear so because they have an obligation, a bounding duty to go now and renegotiate with all that is happening,” Ramjattan told the media.

He added that while the AFC has already made its position clear about changing the contract due to the changed circumstance, he does not believe that General Secretary of the PPP, Mr. Bharrat Jagdeo would be willing to move in this direction.

Several stakeholders have in the past highlighted the importance of Government and Opposition working together on the management of the oil and gas sector.

Jagdeo has said multiple times that his party will not enter into a renegotiation of the lopsided agreement in order to maintain ‘sanctity of contracts’.

A New York based Lawyer, Dr. Vivian Williams has challenged this standing by the Government, as he believes there are clear grounds for which that principle can be set aside or overruled.

In an invited comment, Dr. Williams said successive administrations have, for too long, invoked the common law ‘doctrine of sanctity of contract’ to evade calls for renegotiation of the Stabroek Block PSA.

He said, “What is playing out is the misapplication of a legal doctrine to avoid acting in the nation’s best interest. Because the sanctity of contract doctrine does not apply to the consensual process of contract renegotiation, common sense should have shut down that argument before it was even made.”

The Lawyer added, “Simply put, sanctity of contract means, an agreement made freely, knowingly, and fairly by competent parties, must be kept. It operates as a fundamental principle of contract law, reflected in principles such as ‘pacta sunt servanda’, well known to state actors. Therefore, despite sovereignty, a state is liable if it unilaterally breaches an agreement.”

However, Dr. Williams contended that the renegotiation of a contract is a common practice that does not collide with the ‘sanctity of contract’ doctrine. He said it involves the revisiting of problematic terms of an agreement by parties who may or may not reach agreement on a revision. Therefore, Dr. Williams argued that ‘sanctity of contract’ and ‘renegotiation of contract’ are parallel processes that compliment rather than offend each other.

Just last week this newspaper reported that the major developments in the Stabroek Block validate the call for a renegotiation of the contract. It was former Head of the Environmental Protection Agency (EPA), Dr. Vincent Adams who explained that it is normal for such dramatic events to pave the way for changes to agreements. In fact, he said that while working with “the Exxons of the World” this principle applied, insisting that Guyana can make use of this industry norm.

According to him, “I have spent 30 years at the highest level of the US Government and I negotiated (and) I evaluated contracts. That was part of my life and as a matter of fact, that was a main part of my life, and I’m talking about the Exxons of the world. I have seen many contract you can think about and changes are expected and the one thing that you always have a justification for changing a contract is when there is a major change.”

In 2016, when the Coalition Government renegotiated and signed the Production Sharing Agreement (PSA) with ExxonMobil, the country had only found approximately 1.1 billion barrels of oil in the Stabroek Block. Six years later, over 10 billion more barrels have been discovered in the country’s Exclusive Economic Zone.

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