New PSA a distraction from calls to renegotiate lopsided Stabroek Block deal- AFC

Nov 05, 2022 News

Kaieteur News – The new terms that have been announced for upcoming oil blocks in Guyana’s rich Exclusive Economic Zone (EEZ), is nothing short of an attempt by the PPP Government to distract from the calls of the public to renegotiate the Stabroek Block deal, where oil giant, ExxonMobil has already discovered more than 11 billion barrels of oil since 2015.

AFC Executive, Dr. Vincent Adams

This is according to Dr. Vincent Adams, a member of the Alliance For Change (AFC) party. During its weekly Press Conference yesterday, Dr. Adams in an invited comment pleaded that the public do not fall prey to the effort being made to quiet the calls for a renegotiation.

In fact he explained that, the “political shenanigan” is three fold with its first objective being to distract from the pressures of pulling Exxon to the table. Secondly, he explained that this move is clearly geared at ensuring the American oil company continues to reap major profits, while the third goal of the party is to protect the contracts already secured for its friends and family members under that deal.

“First it’s a blatant attempt to distract from the renegotiations pressure- the pressure that they are being beaten over the head with…the second objective which is also political is to protect Exxon’s entrenched position. There’s no question that this here is to protect Exxon, and then of course it is to protect the interest of friends and family, who are already entrenched in these big contracts that have been given away,” the former Head of the Environmental Protection Agency (EPA) noted.

In doing so however, he pointed out that the Government is allowing “disadvantage” and “unfair treatment” to new investors, which could potentially include Guyanese, while the giant- ExxonMobil- would be allowed to enjoy the terms included in the existing lopsided deal that ensures massive profits to its shareholders.

Dr. Adams argued, “So here you are now with the leff-leff that these smaller contracts, including Guyanese who would be getting an opportunity to bid -they are going to be shut out. They are going to be basically priced out of the market with this gimmick…just to get away from the fundamental business and moral principles that is expected of every democratic society and country which is to have open, free and fair competition.”

On Thursday, Vice President Bharrat Jagdeo held a Press Briefing where it was announced that new Production Sharing Agreements (PSAs) to be entered into with any new oil company would feature a 10 percent royalty rate, 10 percent corporation tax and ring-fencing provision. Notably, companies preparing to participate in Guyana’s offshore bid round this year-end, for the 14 available oil blocks, will be subjected to these terms should hydrocarbons be discovered in those fields.

In making the announcement, the VP also clarified that the 14 blocks range from about 1000 square kilometres to 3000 square kilometres, with the majority of them being close to 2000 square kilometers.

Meanwhile, the Stabroek Block that covers approximately 26,800 square kilometres and is operated by Exxon and its partners- Hess and CNOOC- remains bound to a separate arrangement in which it pays a mere two percent royalty, no taxes and also recovers expenses from multiple projects from the revenue earned by development, in the absence of ring-fencing provisions. It must also be noted that Exxon is allowed to deduct 75 percent of costs from Guyana’s earnings upfront to cover its expenses while the new PSA would cap cost recovery at 65 percent of earnings annually.

To this end, the AFC has urged that the Government ‘put politics aside’ and team up with the Opposition in seeking a renegotiation of the 2016 Exxon contract.

Dr. Adams encouraged, “Let both the Opposition and the party in power come together, put together a team of knowledgeable experts to come up with what’s best for the country of Guyana and spread it across.”

He is adamant that one PSA must govern past and future contractors. He believes, “that would be fair, that would be setting a level playing field and that’s where we have to be going so don’t come up with these gimmicks.”

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