Meagre oil lifts from Stabroek Block, a startling reminder of why Guyana must renegotiate lopsided PSA

Jan 23, 2023 News

– Mines Workers Union

Kaieteur News – Guyana’s meagre oil lifts from crude produced in the Stabroek Block has shocked stakeholders, describing the revelation as a “startling” reminder of why the lopsided 2016 Production Sharing Agreement (PSA) the country has with the ExxonMobil consortium must be renegotiated.

Sherwin Downer, NMWUG,

Senior Finance Minister, Dr. Ashni Singh disclosed during his budget speech last Monday that for the period between 2022 and 2023, Guyana will receive 30 oil lifts from a total of 238 cargos, each consisting of approximately one million barrels of the offshore commodity. For the year 2022, he indicated that Guyana will accept 13 of 102 oil lifts, while for 2023 the government is expected to receive 17 lifts of profit oil, while Exxon and partners will walk away with 119.

President of the National Mine Workers Union of Guyana (NMWUG) Sherwin Downer has also described the situation as “depressing” and an “economic injustice” committed against the Guyanese people. He said that based on the Finance Minister’s information, the oil lifts that Guyana has received so far has amounted to just over one billion US dollars, but believes it is nothing compared to what the foreign companies have received. The union leader found the issue sad, especially in the face of numerous challenges faced by local workers in the sector.

“In his (minister) own words during the budget presentation of 2023, of a whopping 102 oil lifts, Guyana’s only benefit is 13 which amounts to just over a billion US dollars. This represents chicken feed monies for the Guyana government when compared to the remaining 89 which goes to ExxonMobil,” Downer said. “This is a startling reminder to Guyanese of how deeply flawed the 2016 agreement signed between the then Guyana government of (A Partnership for National unity + Alliance For Change) APNU/AFC and ExxonMobil is.”

He said, “This is an economic injustice to a country and people whose population is less than a million yet with a ‘mammoth size’ in wealth and natural resources. With the above mentioned, it is clear as crystal for all Guyanese and the world to see that there is enough merit in calls for a renegotiation of the ExxonMobil deal with Guyana.”

Downer said that as President of the NMWUG, “I feel compelled to add my voice and join growing calls by credible groups, transparency advocates, civil society, religious organisations, other trade unions and many independent voices for a renegotiation of the ExxonMobil agreement with Guyana. Not forgetting the hell Guyanese workers face daily in the oil and gas sector, with almost daily reports of being underpaid, limited availability of work and respect for their rights while working with foreign companies.” “I wish to urge the People’s Progressive Party government to take baby steps to have the Exxon Mobil deal with Guyana renegotiated,” Downer said.

Guyana’s agreement with the ExxonMobil consortium provides that the company recovers 75 percent of the investment it says it puts into developing the Stabroek Block oil fields. The remaining sum is split down the middle between the company and the government. Guyana has a two percent royalty it also collects as part of the PSA. The Guyana government and Exxon have stated that the country receives the most profit from the oil revenues. International experts have warned however that while this may be so, Guyana leaves itself exposed to massive losses based on the 75 percent deductions that will be made. The experts have clarified that Guyana would not lose primarily from the profits it should receive, but from the deductions since the profits would depend on how much the oil companies deduct as expenses.

For the working Liza one and two oilfields, Guyana is long overdue on the audits of the US$7billion that must be repaid to Exxon for operationalising the projects. Stakeholders eagerly await the results of the audits, as government’s point person on the sector Vice President Bharrat Jagdeo has stated, that Guyana would only be able to say whether it was cheated through the audits. The PSA allows Exxon to recover 75 percent of its expenses for the financial year while the remainder is carried over to the following year.