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Govt. fears renegotiation of Exxon contract will chase away investors, hurt country’s reputation – Minister Bharrat
Kaieteur News – If the government interferes with the two percent royalty or any other fiscal provision in the 2016 Stabroek Block Production Sharing Agreement (PSA) signed with ExxonMobil and its partners, it could not only risk chasing away investors but even hurt the country’s reputation as a safe haven for companies’ investments. This is according to Natural Resources Minister, Vickram Bharrat.
The Minister made these and other comments while addressing stakeholders at Local Content Forum hosted by the Private Sector Commission (PSC) yesterday at the Pegasus Suites and Corporate Centre in Kingston.
Natural Resources Minister, Vickram Bharrat
Bharrat said Guyana’s oil sector has been moving at an unprecedented pace. Since the discovery of oil in 2015, and oil production commencing in 2019, he said Guyana is today producing close to 380,000 barrels per day via two oil ships namely the Liza Destiny and the Liza Unity.
He said the country is on course to produce a million barrels of oil a day in four years. To ensure this occurs in record time, he said government signed off on two production licences for the Payara and Yellowtail Projects in the Stabroek Block.
The Minister said the Field Development Plan for a fifth project at the Uaru field will be submitted very shortly by ExxonMobil and its partners, Hess Corporation and CNOOC Petroleum Guyana Limited.
“We are therefore on course for exponential growth,” expressed Bharrat who said the government must commend the partnership it has with Exxon for making this production rate possible.
Bharrat said over the years, the company would have faced criticisms for the PSA signed in 2016. “But we have made a commitment and our position is clear that we will not renegotiate this contract because we want Guyana to be seen as a stable country where investments are secured and there is predictability in companies investing in our country; otherwise, we would be doing an injustice to our country,” the minister stated.
Bharrat said, “This is not about the PPP or the Coalition, this is about our country. Because if we do that, believe me, investors will no longer line up in Guyana because there would be this fear that every time the government changes, there would be renegotiation of contracts. We don’t want Guyana to be seen as that, this is about how people look at us as a people.”
While the Exxon PSA for the Stabroek Block will remain untouched, Bharrat said the government has kept its promise for new petroleum agreements to be subjected to new fiscal terms which were already announced by Vice President Dr. Bharrat Jagdeo. These include a 50/50 profit sharing, a 10 percent royalty, payment of 10 percent Corporation tax and a 65 percent cost recovery ceiling.
The Vice President had said that the 14 blocks to be part of the country’s maiden auction next year will range from about 1000 square kilometres to 3000 square kilometers with the majority of them being close to 2000 square kilometers. Eleven of these will be in the shallow area and three in the deep Area C.
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