Latest update April 7th, 2025 12:08 AM
President Ali dodges question on ring-fencing for 5th Exxon project
…says decision will be made public and justified
Kaieteur News – President Irfaan Ali, on Friday sidestepped whether his Government will approve ExxonMobil Guyana’s fifth oil project in the absence of a ring-fencing provision, but said whatever decision is made, “will be made public” and “can be justified.”
President Ali was at the time responding to a question asked by Kaieteur News during a press conference held at the National Track and Field Facility, located at Leonora, West Coast Demerara (WCD).
President Irfaan Ali on Friday during the press conference held at the National Track and Field Facility, Leonora, West Coast Demerara (WCD).
Ring-fencing serves as a shield and prevents burdensome expenses from being lumped onto one project, thereby shortening profits received. Guyana has been repeatedly warned by international energy institutes that the country may never see the promised annual revenues from its oil sector, as the “one-sided” oil contract gives ExxonMobil and its partners the benefits, leaving Guyana and its people out of their fair share of the wealth.
The 2016 Production Sharing Agreement (PSA) Guyana signed onto, allows Exxon to deduct 75 percent of the resources each month to cover expenses to develop oil and gas projects. The costs that are not covered each month go over to the following month.
So far, four of Exxon’s project in the prolific Stabroek Block has already been given government’s approval. Those developments are: Liza I, II, Payara and Yellowtail projects.
Exxon’s subsidiary—Esso Exploration and Production Guyana Limited has already submitted its documents to the Government for the Environmental Authorization for its fifth project, US$12.7B Uaru development.
It is in this vain that President Ali was asked whether the Government will give the green light for another of Exxon’s US-multibillion projects in the absence of a ring-fencing provision.
While the president did not give a definite answer, he said, “Whatever the Government do will be made public and will be justified. So of course, there is applications and the Government is going through its assessment and when we make our decision, it will be made public. Don’t worry at all… one thing you don’t have to worry…”
Importantly, with regard to the absence of ring-fencing in the 2016 PSA, ExxonMobil Guyana’s Country Manager, Alistair Routledge is reported in the media as saying that, “the current mechanism is very effective.”
During a press engagement, when asked about its willingness to include a ring-fencing provision to the contract, Routledge told reporters, “These deep-water developments have a significant up-front investment cost and the current mechanism supports that so I’m not sure that starting to ring-fence what could potentially be larger projects in the future would actually encourage the sort of developments the country wants to see.”
Moreover, Guyana has so far managed to pay back ExxonMobil and its partners, Hess and CNOOC, approximately US$4 billion for developing the Liza Phase One offshore project. Under normal conditions, with ring-fencing, the country would have now been reaping 50 percent of the profits from that project, but in the absence of this key provision, Guyana will continue to receive a meagre 12.5 percent in profits.
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