‘ExxonMobil would not turn its back on gold-bearing vein’- AFC

Feb 26, 2023 News

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…says Govt. arguments against renegotiation mere excuses

Kaieteur News – The Alliance For Change (AFC) has described Guyana’s Stabroek Block as a “gold-bearing vein” so rich that even if changes are made to the agreement, that governs the fiscal terms, ExxonMobil will not be able to walk away.

The party’s statement comes at a time when politicians have been stating that renegotiating the lopsided arrangement can deter investors from the industry.

AFC Member of Parliament (MP), Deonarine Ramsaroop on Friday argued, “There is no company in Guyana that can hold government at gun-point, none. This is your country; this is your turf. When you come as business people here, you have an opportunity to work with the government. You (government) can’t say you’re working with the companies.”

He insisted that investors must play by the rules set by the governing authority, rather than the other way around.

Ramsaroop was at the time responding to a question from this newspaper on whether the AFC believes Exxon would turn its back on Guyana, should government decide changes are required to the lopsided 2016 Production Sharing Agreement (PSA).

The People’s Progressive Party (PPP) administration, though it promised in its Manifesto to renegotiate the oil contract, has changed its stance and now believes that if the deal is amended could drive investors out of the country.

Cognisant of the vast resources discovered offshore to date however, the AFC which is responsible for signing the contract, believes that such a move would not be a deterrent.

Leader of the Party, Khemraj Ramjattan was the first Opposition MP to throw his support behind a renegotiation of the contract. He told reporters at a press conference on Friday that the government has not been making use of its wild cards to haul the oil company to the table.

Ramjattan said for instance that when the contract was inked under the A Partnership for National Unity (APNU+AFC) Coalition government, the discovered resources were just around four billion barrels. Today, that figure has more than doubled, with the Stabroek Block basin now estimated to hold in excess of 11 billion barrels.

As such, the party leader explained, “I do not believe that they are going to walk aw

ay…this is a gold-bearing vein that they have found and so (I believe) that they are going to stay.”

He argued that the PPP government clearly lied in its elections manifesto to secure the votes of its supporters, as it is refusing to renegotiate the contract even though the circumstances have changed significantly since the deal was first inked.

Former Telecommunications Minister, Catherine Hughes argued that Vice President Bharrat Jagdeo could not have only now discovered the stability clause in the contract, as he passionately told Guyanese on numerous occasions that the deal would be renegotiated.

“I am sure when Mr. Jagdeo said that he was going to renegotiate, he took into consideration the sanctity of contracts. I think that is definitely just an excuse,” she urged.

Meanwhile, Ramjattan was also asked by another reporter if he believes that the government must honour the contract signed by the previous administration, since changes could be a sign of “bad faith” to investors in the sector.

To this end, the leader detailed that oil producing states have amended and even strayed from deals signed by their predecessors in the past, listing the United States of America as an example.

He outlined that the government has moved to up its taxes on oil companies, a clear indication that it would not “show bad faith” to investors.

Ramjattan added that due to the windfall (excess profits) being experienced by the oil giants, governments too must explore options to rake in more benefits for its citizens.

The Exxon contract has been criticized by not only local players, but international agencies as well. In fact, some organizations even believe Guyana may have gotten the worst deal on Earth.

The contract in question only allows for a mere two percent royalty to be paid to Guyana in addition to a 50 percent profit share, after 75 percent was deducted towards the cost to develop the resource.

The deal that the oil company often brags about to its shareholders, also force Guyanese into paying their share of taxes, amounting to millions of US currency each year. This figure is likely to further balloon too as more operations come on stream.

In addition, the country is allowing ExxonMobil to operate offshore without full liability coverage in the event of an oil spill, which means that the risk is borne by Guyana. Another key provision that is lacking in the document is ring-fencing provision, which would avoid the oil company from using the petroleum revenue in one field to cover for expenses in another.

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• ExxonMobil, investors, oil, PSA, renegotiation

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