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New discoveries not enough to convince Exxon to give Guyana more – ExxonM Guyana Head
Kaieteur News – Despite the Stabroek Block unlocking over 10 billion barrels more of proven reserves since the 2016 Production Sharing Agreement (PSA) was inked, multinational oil corporation, ExxonMobil is adamant that the country should not gain more fiscal benefits on its resources.
ExxonMobil Guyana President, Alistair Routledge
President of ExxonMobil’s subsidiary- Esso Exploration and Production Guyana Limited (EEPGL) – Alistair Routledge made this clear during an engagement with the media, at the company’s Duke Street, Kingston, Georgetown office.
He was at the time responding to a question from this newspaper on whether the company has now shifted its position on renegotiating the deal, in light of intensified calls to this end and the continued success, through more discoveries in the lucrative Stabroek Block.
Routeledge said, “This agreement was competitive at the time that we signed it and we still believe it to be the case, and we have made investment on the basis of the contract as it stands.”
To this end, he explained, “That continued question really misses the point which is: How does the country maximize the value from the contracts that it has and from future contracts.”
The President of ExxonMobil Guyana even pointed out, “This is the most valuable contract the country has and it should be focused on how we make it work the best we can. I think that is what the government is doing, it is saying let’s make sure we attract the investment. The moment we try to change the contract the investment will stop, the local content development will stop.”
In 2016, when the Coalition government renegotiated and signed the PSA with US oil giant ExxonMobil, the country had only found approximately 1.1 billion barrels of oil in the Stabroek Block. More than six years later, over 10 billion more barrels have been discovered in the country’s Exclusive Economic Zone, a major increase that stakeholders believe warrant a change in the lopsided contract.
Guyanese have been protesting for government to renegotiate the oil contract with Exxon. In fact, the People’s Progressive Party (PPP) while in Opposition had promised to “review and renegotiate” the deal entered into by the former government; however the party has now decided that it must maintain the agreement.
Citizens in Guyana believe that the present agreement only favours the oil company, as Guyana receives a mere two percent royalty for its sweet light crude and settled for 50 percent profit sharing, after Exxon takes 75 percent of the earnings to clear its expenses.
The deal that the oil company often brags about to its shareholders, also force Guyanese into paying their share of taxes, amounting to millions of US currency each year. This figure is likely to further balloon too as more operations come on stream.
In addition, the Environmental Protection Agency (EPA) is allowing ExxonMobil to operate offshore without full liability coverage in the event of an oil spill, which means that the risk is borne by Guyana. This matter has since been challenged by two Guyanese, through their Attorneys.
Another key provision that is lacking in the document is ring-fencing provision, which would avoid the oil company from using the petroleum revenue in one field to cover for expenses in another.
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