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Exxon still silent on accusation of violation of oil contract
Kaieteur News – United States oil major, ExxonMobil has been accused of violating the 2016 agreement it inked with Guyana, as there is no evidence of a feasibility study- for the utilization of the excess gas in the Stabroek Block, through the Gas to Energy project- even though this is listed as a requirement in the contract.
The Alliance For Change (AFC), a political third force in the country and former member of the A Partnership for National Unity (APNU) Coalition, highlighted this during a press engagement last Friday. This newspaper reached out to the oil company upon the conclusion of that event, seeking clarity on whether a feasibility study was conducted by the developer.
Kaieteur News was told that the information was shared with the relevant officials on April 22. During the week, a reminder of the query was issued to the company. The message was acknowledged but to date, there has been no word on this serious accusation of a likely breach of the contract, on the part of the oil giant.
Article 12.1 (b) of the Exxon contract states, “…If there is any excess Associated Gas in the Oil Field after utilisation pursuant to Article 12.1(a) the Contractor shall carry out a feasibility study regarding the utilisation of such excess Associated Gas of such Oil Field.”
The same clause explains that if the feasibility study was completed before the submittal of the Field Development Plan for the location, this document shall be added to the Plan. The contract also states that in the event the contractor’s feasibility study on the utilization of excess associated gas is not completed before the submittal of the Development Plan, the contractor shall provide the Ministry with regular updates on the progress of such feasibility study. Upon completion, the study shall be submitted to the Ministry of Natural Resources and the Guyana Geology and Mines Commission (GGMC). According to the agreement, the contractor’s feasibility study shall be completed no later than 5 years following the submittal of the Development Plan.
Given that there is no trace of this document, the AFC believes that ExxonMobil has violated the ‘sanctity of contracts’ principle. Executive member of the party, Dr. Vincent Adams asserted, “No feasibility study has been done at that location (Wales, West Bank Demerara). As a matter of fact, it (Exxon) violated this sanctity that this administration keeps talking about. They violated the sanctity of the contract…it says before any gas project is implemented, there has to be a feasibility study and there was no feasibility study.”
He continued that Vice President Bharrat Jagdeo has merely given assurances that the project is a “no-brainer”. Dr. Adams, a Petroleum Engineer however noted, “Every project starts with planning and it ends with planning,” adding that this detailed plan would craft the necessary steps regarding possible changes in the economics of the country, taking its development and other factors into consideration.
The AFC member maintained, “None of that was done except that this no-brainer stuff, I don’t know what it means, but there was no feasibility study which is in violation of the sanctity of the contract which calls for a feasibility study before any gas project was supposed to be implemented.”
- Breach, ExxonMobil, PSA, silent, violate
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