Jagdeo refusing to renegotiate Exxon contract on 11B barrels but condemns Coalition for not demanding more from 3B in 2016

Jul 01, 2023 ExxonMobil, News, Oil & Gas

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Kaieteur News – Vice President Bharrat Jagdeo on Thursday told reporters during an interview at the Arthur Chung Conference Center that the former A Partnership for National Unity + Alliance For Change (APNU + AFC) Coalition had a great bargaining chip in its possession- some three billion barrels of oil- to use to its advantage to secure a better deal from ExxonMobil when it inked the Stabroek Block Production Sharing Agreement (PSA) in 2016. Instead, he argues that the administration inked an egregious contract that it now wants renegotiated.

With a growing number of oil discoveries in the lucrative Stabroek Block, Guyanese and international experts have all been calling on government to renegotiate the deal to secure more benefits for Guyana and its people, since the contract mostly favours ExxonMobil and its co-venturers.

When the Coalition government signed the contract, two discoveries were made totaling approximately three billion barrels of oil. To date, over eight billion barrels more have been found offshore in the 26,800 square kilometers block, increasing Guyana’s total proven reserves to over 11 billion barrels of oil.

Despite this development, Jagdeo maintains that the contract will not be renegotiated.

On Thursday, he told selected reporters during an interview that when he saw the Exxon contract initially, he met with the then Head of State, David Granger to express his disdain. Jagdeo noted that when former President, Janet Jagan signed the exploration agreement in 2019, the government was desperately trying to get investors to explore so “practically we were prepared to give everything”.

Meanwhile, he said when the Coalition inked the deal with Exxon three billion barrels of oil was already discovered in the Stabroek Block. As such, the Vice President said, “They had the bargaining tool, greater bargaining tool at that time and they didn’t leverage it.”

While the VP has condemned the now Opposition party for failing to leverage its bargaining power to get more for the Guyanese people from the Stabroek Block deal, the People’s Progressive Party has done no different. With an increase of more than eight billion barrels of proven reserves, the incumbent administration is bent on keeping the existing lopsided arrangement in place.

In fact, Jagdeo reaffirmed this during his interaction with the reporters on Thursday. He explained that while the PPP was not comfortable with the royalty rate for instance in the 2016 PSA, it has moved to address this in the new model oil contracts being finalized to govern future production areas offshore Guyana.

Former Minister of Natural Resources, Raphael Trotman who was responsible for signing the contract on behalf of the state recently expressed the view that the oil contract can be renegotiated.

Trotman in a new book titled ‘From Destiny to Prosperity’ said, “The demand for renegotiation of the Exxon “contract” continues unabated, and my own view is that no contract is inviolable, and therefore, it can be renegotiated…undoubtedly, if Guyana, as a sovereign state wishes to renegotiate the contract to get “better” terms, then I would support such an initiative.”

Trotman is known across Guyana and wider afield as the citizen who signed away Guyana’s vast riches by binding the country to the abusive provisions of the PSA with ExxonMobil, Hess Corporation and CNOOC. The contract was signed by the then Minister with responsibility for Natural Resources on October 27, 2016.

In that agreement, Guyana accepted a two percent royalty on its sweet light crude and agreed for the oil companies to take 75 percent of the revenue towards the recovery of costs for their investment. The remaining 25 percent is then shared equally between the parties guaranteeing Guyana a 12.5 percent share. When Trotman signed the PSA, he also agreed to waive all taxes for the oil companies, forfeiting billions of US-dollars in revenue for the country.

Besides the fiscal terms, the country has also agreed to a number of other provisions extending an upper hand to the oil companies in the administration of the sector. For instance, the PSA shields the oil companies from the passage of new legislation that can affect their revenues. Transparency advocate, Dr. Yog Mahadeo had equated this as a mockery of the country’s Constitution.

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• bargain, barrels, condemns, oil, PSA

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