‘Line must be drawn on all future ExxonMobil projects’

Nov 08, 2022 News

– Yog Mahadeo says Govt. throwing away guaranteed value for uncertain cash in new oil blocks

By Davina Bagot

Kaieteur News – The prolific Stabroek Block that has been Guyana’s treasure chest, unlocking more than 11 billion barrels of oil, is linked to a lopsided Production Sharing Agreement (PSA) that the People’s Progressive Party Civic (PPP/C) administration has refused to change.

Instead, government has said that all future deals will secure more benefits for the country. Transparency activist, Dr. Yog Mahadeo finds the government’s position disconcerting. In an invited comment, Dr. Mahadeo said the government must not be allowed to throw away the wealth in the Stabroek Block, in hopes that more oil would be discovered in the smaller oil blocks that are soon to be auctioned.

Civil society activist, Dr. Yog Mahadeo

“The current value of money is as real as it could be, compared to future value of money, and what we are doing is we are throwing away current value and we are putting eggs in the basket for future value. In other words, we are pinning the hopes of a good PSA on future wealth or future contracts and not doing anything to maximise on what Guyana could get on the current one, so it is disconcerting,” Dr. Mahadeo said Monday.

He reminded that the PPP/C in its 2020 manifesto had promised to renegotiate the existing contract, rather than seek more on future deals. “They are trying to camouflage the current deal and we must not allow ourselves to be distracted from these current despicable conditions where Guyanese are paying the taxes for Exxon and all that goes with it”, Dr. Mahadeo said.

The advocate for good governance said the line must be drawn now on the projects ExxonMobil wants government to approve in the Stabroek Block. Thirty-five discoveries have been made so far, with four projects already given the green light.

To this end, Dr. Mahadeo agrees with the Opposition that the new terms must extend to all future projects the oil company wants to pursue in Guyana.

“We need to identify where we are and draw the line to say hereon it’s going to be different… all new discoveries and all new projects need to come under this new dimension or this new paradigm,” he insisted.

Already, both the People’s National Congress Reform (PNC/R) and the Alliance For Change (AFC) have said that the terms of the new PSA announced by Vice President Bharrat Jagdeo for the 14 oil blocks that are to be auctioned, must apply to the Stabroek Block to level the playing field.

Jagdeo said the new fiscal terms will include a 10 percent royally, 10 percent corporation tax and a ring-fencing provision. He explained that the 14 oil blocks vary in size but range from approximately 1000 square kilometres to 3000 square kilometres, with the majority of them being close to 2000 square kilometres.

Meanwhile, the Stabroek Block which covers approximately 26,800 square kilometres and is operated by ExxonMobil 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.

Further, 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.

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