Pressure mounts on govt. to renegotiate Exxon contract  

Oct 13, 2022 News

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– Yog Mahadeo restates British law firm findings on signing of PSA

Kaieteur News – As Guyanese remain steadfast in their demand for the renegotiation of the ExxonMobil contract transparency and civil rights activist Dr. Yog Mahadeo has reminded that British law firm Clyde and Co. in an independent investigation released, stated clearly the disadvantageous position the country was in when it signed the Production Sharing Agreement (PSA) without a better knowledge of its Stabroek Block oil wealth.

The report highlighted that not only did the Guyanese government at the time wanted to know its oil bounty before signing the PSA, but it appeared that the Esso Exploration and Production Guyana Limited (EEPGL), Exxon’s subsidiary, pressured the administration to sign the document before revealing the Liza Two resource.

When his report was released, it said that, “The Contractor Consortium appears to have put a lot of pressure on the Government and the MoNR (Ministry of Natural Resources) to secure the 2016 Agreement in a short time scale.” It said that the reason given was related to commitments for drilling rigs that Exxon and partners said would need to be stepped away from if a new agreement was not signed. But according to the report, the operators really wanted to secure the deal before Guyana knew its “world class” oil find which could have changed its negotiating position. “’ It seems to us likely that EEPGL were also strongly driving to have a new agreement signed prior to the Liza-2 well results becoming fully known and understood by the Government. Presumably because knowledge of a “world class” discovery could have altered the Government’s negotiating position,” the investigators said.

Dr. Mahadeo had highlighted this aspect of the Clyde and Company report as conversations heighten over Guyana’s PSA being signed at a time when just over a million barrels of oil equivalent was confirmed, but now covers another 10 billion barrels of crude, under the same terms and conditions. For this reason, among others, stakeholders have been demanding renegotiation of the 2016 contract. Attorney-at-Law and anti-corruption advocate, Christopher Ram had stated last year his belief that the Clyde and Co. report has enough weight to push for the renegotiation of the Stabroek Block deal. He said that he also believed that the governing People’s Progressive Party Civic (PPP/C) administration would have put as priority a review of the Stabroek Block agreement using the Clyde and Co report. Instead, that government just weeks ago highlighted that it would not be renegotiation until the life of the Stabroek agreement was over, some 14 years from now.

Recently, former Environmental Protection Agency (EPA) CEO Dr. Vincent Adams insisted that a main justification for changing a contract is when there is a major change in the environment of the agreement, such as the significantly increased quantity of oil found after the 2016 agreement.  He said in his 30 years spent at the highest level of the US Government negotiating and evaluating oil contracts that also involved the “Exxon’s of the world”, changes are expected, especially on these grounds. Dr. Mahadeo told the Kaieteur News that, “The fact that since 2016 the volume of oil being borne out of the same agreement that envisaged a fraction of what was expected production, is itself a call for renegotiation.” He fully agreed with Dr. Adams in that the Guyana government is in a good position to take the oil companies back to the bargaining table given the quantity of oil now compared to what was known then.

The Clyde and Co. report said that Guyana’s 1999 Agreement and the 1999 Licence was due to expire in June 2018 and could not be renewed because it was already done twice under the law. The country nonetheless wanted to maintain a strategic relationship with the oil companies for the development of its oil resource and as a deterrent to Venezuela in the border controversy matter. It also wanted the Contractor Consortium to complete the exploration activities so the full extent of the then evident resources could be identified and therefore entered discussions on how the Contractor could continue its work uninterrupted. It was decided by the government that a new petroleum agreement and prospecting licence would be necessary. The report said that the Contractor Consortium also desired the renewed agreements but was not receptive to the amendments proposed. Apart from keeping Guyana in the dark about its Liza Two wealth, the Clyde and Co. report said that “the Contractor Consortium was not receptive to any changes and fought hard to retain the same terms as in the 1999 Agreement.”

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