ExxonMobil would not walk away easily if Govt. demands changes to contract- Exxon Guyana

May 21, 2023 ExxonMobil, News, Oil & Gas

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Kaieteur News – The conversation about changes to the “sanctified” ExxonMobil oil contract took a U-turn on Friday, when the company’s President committed that it would not walk away if government demands more from its sweet light crude, discovered in the lucrative Stabroek Block.

President of Esso Exploration and Production Guyana Limited (EEPGL) – ExxonMobil Guyana- Alistair Routledge was at the time being pressed by this newspaper on returning to the table with the country’s leaders to discuss more fiscal benefits for the nation, in light of the continued success of the oil block- which happens to be the country’s largest – when he initially started off by describing the contract as “competitive”.

The oil company’s representative also sought to shift this newspapers attention to the future benefits of the arrangement. He explained, “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. 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.”

Routledge also boasted that this is the “most valuable contract the country has”, therefore, the country ought to focus on how to make it work. In fact, he explained, “The moment we try to change the contract, the investment will stop, the local content development will stop.”

Kaieteur News immediately sought clarity from Routledge on whether he believes ExxonMobil Corporation would walk away if the administration asks for a 10 percent royalty for instance.

To this end, he explained, “History will tell you that when disputes start about contracts, investments stop, investors hate uncertainty.” He was however told that the question was directly about Exxon and if it is prepared to pack up and leave Guyana over such a dispute, especially since it has already made over 30 discoveries since 2015.

In response, Routledge explained, “No company walks away easily. I have lived through Venezuela in 2004, 5, 6, 7 when the government imposed a new contract on our operations and we worked extremely hard to avoid that but the government created an environment where we couldn’t stay and it ended up in international arbitration and in the meantime, no further investment, you can see what happened to the country, it has a huge endowment of resources, but sadly has lacked investment for many years and has moved from a production of 3 million barrels to less than 600,000 barrels of oil per day.”

Last year during a Local Content Forum, Minister of Natural Resources, Vickram Bharrat noted that if the government interferes with the two percent royalty or any other fiscal provision in the 2016 PSA, signed with ExxonMobil and its partners, it could not only risk chasing away investors but even hurt the country’s reputation as a safe haven for companies’ investments.

Bharrat said over the years, the company would have faced criticisms for the PSA signed in 2016. “But we have made a commitment and our position is clear that we will not renegotiate this contract because we want Guyana to be seen as a stable country where investments are secured and there is predictability in companies investing in our country; otherwise, we would be doing an injustice to our country,” the minister stated.

He also pointed out, “This is not about the PPP or the Coalition, this is about our country. Because if we do that, believe me, investors will no longer line up in Guyana because there would be this fear that every time the government changes, there would be renegotiation of contracts. We don’t want Guyana to be seen as that, this is about how people look at us as a people.”

Even though this has been the strong point by the government in refusing to amend aspects of the contract, certain stakeholders are adamant this could not be further from factual.

Meanwhile, in an invited comment, Dr. Yog Mahadeo, an advocate for a better deal told Kaieteur News on Saturday, “The fact is that Exxon will never walk away from Guyana. Everyone knows that, even the governing cheerleaders of Exxon. We must be the only country on earth that allows Exxon to be superior to our constitution and our National Assembly and refuse to do anything about it!”

Mahadeo was keen to note also, “We know that Guyana is their cash haven! That is the reality. We represent cash flows that Exxon will never walk away from, but we also represent opportunities for corrupt politicians so they will forever kneel and bow to Exxon. We the people have to now take matters in our own hands and stop the steal.”

As such, he told Kaieteur News, “As Guyanese, we must realize that we hold the real power, not Exxon, not the Government in cahoots with the opposition. It is us as Guyanese that must stop the steal. Let us realise our value to Exxon.”

Leader of the Alliance For Change (AFC), Khemraj Ramjattan also explained in a previous interview that he is of the firm view that Exxon will not leave Guyana’s shores if the Government of Guyana were to change the lopsided deal.

“ExxonMobil will never leave Guyana anymore. You can argue that you need a better deal and they will give you a better deal,” he said.

Ramjattan is adamant that “No investor would want to leave Guyana when over 11 billion barrels of oil have been found”. He said that Guyanese ought not to accept the suggestion by the People’s Progressive Party (PPP) Administration that a change to the Stabroek Block PSA would drive investors away.

The AFC leader said his party believes that due to the changed circumstances in the prolific Stabroek Block, which ExxonMobil holds, there is need for the country to secure better terms. This, he said, will not chase investors.

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• away, changes, Contract, oil, Walk

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