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Exxon looking to mirror Guyana’s success in India
Kaieteur News – American oil giant, ExxonMobil is looking to mirror its success in Guyana’s oil and gas sector in India’s upstream sector. This was disclosed by Monte Dobson, lead country manager for South Asia at ExxonMobil, during an interview with Entertainment Tonight (ET).
The energy giant’s affiliate, Esso Exploration and Production Guyana Limited (EEPGL) is the operator of Guyana’s lucrative Stabroek Block, which is 6.6 million acres and has over 11 billion proven barrels of oil. EEPGL holds 45 percent interest in the Stabroek Block. Hess Guyana Exploration Ltd. holds 30 percent interest and CNOOC Petroleum Guyana Limited holds 25 percent interest.
Notably, the Stabroek Block Production Sharing Agreement (PSA) Guyana signed onto with Exxon has been labeled as lopsided. Under the deal, Exxon only pays Guyana a mere 2 percent royalty, enjoys massive tax breaks and there is also the absence of a ring-fencing provision.
While persons like the Vice President (VP) Bharrat Jagdeo and Minister of Legal Affairs, Anil Nandlall have acknowledged Guyana has signed onto a lopsided deal – the PPP-government refuses to renegotiate the contract and continues to allow the oil giant to rush full speed ahead with its crude extraction.
“We are looking for the next Guyana,” said Dobson during the interview with ET, referring to the company’s ambition to replicate in India the recent upstream success it has had in the South American nation – the Economic Times reported.
The Exxon official added, “The aim is to make a big discovery in India than investing in a producing field or developing an existing discovery.”
Dobson said too that Exxon possesses the right technology and the experience needed for the Indian conditions. “The type of geology we have seen here is the same as in Guyana,” he added.
Moreover, while ExxonMobil is keen to invest in the Indian oil and gas sector, it wants the country to offer protection against expropriation, neutral arbitration and globally competitive returns that must stay intact through the term of the contract.
“What we are looking to do in the Indian upstream is to move from ‘very interested’ to ‘committed’,” Dobson said, adding, “We expect 2023 to be a pivotal year for our India plans.”
The media outlet also reported that Exxon has been studying Indian geological data and engaging with the government on policy reforms for a few years. It has an agreement with state-run Oil and Natural Gas Corp (ONGC) for joint exploration in the country.
Windfall taxes do not work in the long run, Dobson said, referring to the imposition of such taxes on oil companies in India and other places. “Such steps can shift investments away from a country over the long term,” he said.
Exxon wants the exploration contracts to provide a legal shield against any move by the government to expropriate assets.
“It’s really rooted in experience,” he said, citing the company’s experience in Venezuela where it faced expropriation after a change in government. For dispute redressal, the company also wants the flexibility to pursue arbitration in any country mutually agreed upon rather than just in India.
Additionally, Kaieteur News recently reported that VP Jagdeo is expected to visit India next week to tie up agreements with the Government of India for cooperation in the blossoming local oil and gas industry.
President Irfaan Ali along with a high level team were in India for a seven-day trip and entered into several new agreements with the Indian state for collaboration in other sectors, inclusive of manufacturing and power generation.
Meanwhile, Jagdeo in announcing the auction of 14 of Guyana’s oil blocks back in November last year had said the process, “is consistent with the promise we made while in Opposition that future blocks will be given out only through auction. We are not going to do this directly, except if it’s a state-to-state engagement with the government participating.”
- CNOOC Petroleum Guyana Limited, Entertainment Tonight (ET), Esso Exploration and Production Guyana Limited (EEPGL), ExxonMobil, Monte Dobson
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