Latest update January 17th, 2025 6:30 AM
Keep focused on renegotiating lopsided Stabroek Block deal – AFC urges
…as Govt. releases new model agreements
Kaieteur News – The Alliance For Change (AFC) has renewed its call for Guyanese to remain focused on the renegotiation of the Stabroek Block Production Sharing Agreement (PSA) rather than be distracted by the new model contracts released by the government to govern future shallow and deep water oil blocks.
Executive member of the Opposition party, Dr. Vincent Adams in responding to a question from this publication during a press conference yesterday said, “I have always said that that’s the biggest distraction there is. It’s a distraction from the issue at hand which is renegotiating the Exxon (contract) which is (for) the Stabroek Block.”
He insisted that Guyanese should not shift their focus from the prolific oil block where so far more than 11 billion barrels of oil has been discovered.
Dr. Adams said, “What should have been done is to treat all (oil blocks) equally. You cannot give Exxon the hog because that’s what’s happened, they have 11 billion barrels that they already sealed up, who knows how many barrels are left in those reservoirs so they are big, fat and happy already.”
Given this position, the AFC said Exxon may very well not bother to participate in the auction of the 14 available oil blocks, especially since it will cost them more.
The former Head of the Environmental Protection Agency (EPA) also reasoned that the heavier expectations may discourage local investors from participating as they may not be able to afford the government’s expectations.
In the meantime, Dr. Adams said Guyanese should be calling for ExxonMobil to be subjected to the same terms of the new agreements.
“Everybody should be treated equally. Exxon should not get preference over anybody, especially new investors. We should shift…if we are now thinking that this is the best thing, or the best deal, this new arrangement then why wouldn’t it be the best deal for the government with the Stabroek Block that has most of the oil anyway? I think it’s very fair,” he explained.
On the other hand, Chairperson of the AFC, Catherine Hughes said the government has displayed an attitude of being uninterested “in listening or incorporating any knowledge, any recommendations (and) any additional expertise. However, she said from the AFC’s side, the party will continue to voice its concern in an effort to plug the issues.
On Monday, the government released two draft PSAs for the oil blocks on auction. It has however made it clear that the Stabroek Block will remain subjected to the lopsided terms of the 2016 oil contract.
Notably, the 14 blocks on auction range from about 1000 square kilometres to 3000 square kilometres, with the majority of them being close to 2000 square kilometres. Meanwhile, the Stabroek Block covers approximately 26,800 square kilometres.
The new PSA feature a 10 percent royalty rate (up from the existing two percent); a 10 percent corporation tax and a number of other improved provisions for monitoring of the sector. It also caps the recovery of expenses at 65 percent of earnings annually. Presently, the Stabroek Block operator is allowed to deduct 75 percent of costs from Guyana’s earnings upfront to cover its expenses.
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