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Govt. must inform nation what provisions in Exxon deal are bound by ‘sanctity of contracts’- Attorney-at-Law
…as both parties deviate from signed terms
Kaieteur News – Attorney-at-Law and civil rights activist, Elizabeth Deane-Hughes is calling on the Government of Guyana (GoG) to tell citizens which provisions in the lopsided Production Sharing Agreement (PSA), it signed with US oil giant ExxonMobil, will be subjected to the ‘sanctity of contracts’ principle.
Attorney-at-Law, Elizabeth Deane-Hughes
Her comments come on the heels of a statement recently made by Vice President Bharrat Jagdeo, who threatened that ‘bricks would fall’ on Exxon’s head, if it refuses to allow Guyana to audit beyond the timeline stipulated in the agreement.
Given the deviation from the contract and the sudden apparent disregard for the sanctity of contract principle, the Lawyer believes the GoG must be prepared to say which terms will remain bound by this feature and which will not be.
In fact, the Attorney said this question is most necessary as the oil and gas activities in the Stabroek Block, continue to scale up.
In an exclusive interview with Kaieteur News, Deane-Hughes noted, “In this era of Guyana’s burgeoning oil and gas sector with its voracious acquisition of social license to operate (SLO) in tandem, we the alleged beneficiaries of the PSA wonder what are the current, valid articles or terms of the PSA to which sanctity must apply.”
The Lawyer pointed out that in the last year, both parties to the agreement knowingly waived the need to adhere to its stated provisions. This she said was seen in the pursuit of the “transformative and transformational” Gas-to-Energy (GTE) project, as there is still no evidence of a feasibility study from Exxon, for the utilization of the excess gas in the Stabroek Block, as required under the contract.
More recently, Deane-Hughes highlighted that citizens are now being told that there has been a waiving of another set of requirements in the PSA, to allow for the conduct of belated cost oil audits, this time by the GoG.
To this end, she queried, “Would these precedent setting signatories of the PSA kindly inform us, the alleged beneficiaries of the PSA, what are the exact articles to which sanctity must apply and which are “waive-able” terms. Will we be informed before or after the fact of terms of PSA being varied while we get buried in obfuscation, or will we just be simply ignored?”
The government has often used the ‘sanctity of contracts’ principle as its excuse to avoid renegotiating the terms of the Stabroek Block deal. Though it said that the terms must remain intact to uphold this principle, it has now deviated from the contract and is even prepared to ‘rain bricks’ on the operator’s head for failing to agree to the changes.
While the government has decided to use the cards in its favour to get ExxonMobil to agree to extend the time limit for audits to be completed, it refuses to act similarly and exercise its authority, to mend other lopsided terms defined by the contract. Once amended, these provisions would earn more revenue for the country from the petroleum sector and would still be profitable for the oil giant.
For instance, Guyanese have been calling on the leaders to up the mere two percent royalties the country receives on its resources and subject the oil company and its affiliates to the tax laws of the country.
Other abusive provisions in the agreement allow Exxon to hold hundreds of US-millions for the state in clean-up and restoration funds that would be needed until production ceases offshore.
In the meantime, Guyana must pay whatever interest rate is attached to the cost of developing the resources in the Stabroek Block. The country has been advised to put a cap on this cost to prevent further exploitation of its wealth. In addition, citizens have been calling for a ring-fencing provision to be added to the agreement, which would allow for each oil project to pay for itself. Importantly, Guyana is yet to secure full liability coverage from the oil company for the Stabroek Block operations, even as production and exploration activities continue to increase.
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