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Govt. still accepting comments on new PSA – Jagdeo
May 03, 2023 ExxonMobil, News, Oil & Gas
…to be finalised by July
Kaieteur News – The model oil contracts that will govern the 14 new oil blocks presently on auction will be finalised by July.
This is according to Vice President, Bharrat Jagdeo who also clarified that even though an initial period of two weeks was established as the consultation phase on the new contracts, government is still accepting comments in finalising the Deep and Shallow Water Production Sharing Agreements (PSAs).
Vice President, Bharrat Jagdeo
During a recent press conference, the VP said, “we have just had to extend the auction to May-July because we promised we will get a new PSA and a new Petroleum Act replacing the one from 1986 before we conclude the auction. We are having a hard time because we are going through it in great detail, it is taking longer than we anticipated.”
He explained that the while a number of issues have already been addressed in the new draft agreements, government still needs time to consult on the new Petroleum Act. The former head of state anticipates that the new May/July deadline will be enough time to complete both the passage of the legislation and finalization of the PSAs.
In the meantime, he noted, “There are quite a few issues that came in, we are reviewing those. We still have a number of people who are sending stuff to us because although the timeline was two weeks…we are still in the process of doing the final PSA, the comments are coming in and we are paying attention to them. We are not gonna ignore people’s comments.”
Jagdeo said this offers the Leader of the Opposition, Aubrey Norton an opportunity to submit comments as up to the time of his announcement, the party had not given its contribution to the PSAs. According to the VP, this was “laziness” on the part of the Opposition since the flaws in the current PSA have been known for years now. “By now, they should have formed an impression of those critical issues,” he said.
He added that if the comments are submitted by the political group, “I don’t think we would ignore the comments totally if they submit.”
According to him, the oil and gas companies too have submitted comments on the draft oil contracts which are being considered at this time. He said that while government is committed to securing more benefits for Guyana on the fiscal side and formulating an agreement to regulate from a safety and environmental perspective, it is equally fixated on ensuring more business flows to the country.
He said, “What we also want (is) to attract investments because you have over 80 countries now out there looking for, through auctions, looking for investment dollars in the oil and gas sector and the investment dollar is shrinking as many of these global companies try to move away from upstream activities in the oil and gas industries.”
The VP said, “We want to get the investment dollars here so we can keep the momentum going here. Not just momentum for the oil and gas companies but momentum in the economy and for all of the Guyanese who are now building a business around this emerging industry as well as the locals who are working in the industry.”
As such, he said it was important to balance the new PSAs with the oil companies in mind. Jagdeo however made it clear that the “fiscal terms are practically set in stone.”
The new PSAs seek to rake in a 10 percent royalty from oil companies that will operate the 14 offshore blocks on auction. There will also be a 10 percent corporate tax and a 65 percent cap on cost recovery. Meanwhile, the Stabroek Block, operated by ExxonMobil and partners remain bound to the most abusive contract known to the sector.
That contract binds Guyana to a mere two percent royalty and allows Exxon and its partners a tax-free environment. The agreement grants cost recovery of up to 75 percent, while the remainder is shared equally as profit between the parties. Stakeholders have so far called on government to subject Exxon to the terms of the new PSA, for all other projects it wishes to pursue in the Stabroek Block.
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