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Pres. Ali admits Guyana has a bad Exxon deal, but refuses to renegotiate – BBC reports
Kaieteur News – Guyana’s President Irfaan Ali during an interview with British Broadcasting Corporation (BBC) Senior Journalist Gideon Long reiterated his administration’s position to not renegotiate the lopsided Exxon deal, but admitted that the contract is one that benefits the oil major more than this country.
President of Guyana, Irfaan Ali (Aaron Davidson/Getty Images)
On Monday, BBC published the interview Long had with President Ali. The Head-of-State was asked about Guyana’s oil and gas resources and the way forward for the country. After Ali highlighted that Guyana has about 11 billion barrels of proven oil reserves, the journalist asked him his thoughts on Guyana having a bad deal.
Long’s question to President Ali was: “those big oil deposits that we started by talking about, those were discovered before you came to power and some critics have said that the previous government when they signed those contracts with Exxon and its partners, they were too generous, they didn’t get a good deal for Guyana. They gave away Guyana’s oil riches too cheaply. How true is that?”
In response President Ali said, “Well, I would say definitely, we did not have the best of deals, Exxon have a good deal signed by the last government.” Ali then highlighted that sanctity of contract is “very important” to his Government, adding, “and we can’t go back on that.” To this end, Long asked, “So there will be no renegotiating of the contract?”
“We cannot go back and renegotiate,” President Ali responded. He went on to state that while the Government of Guyana is unable to renegotiate the deal, they have embarked on several initiatives to reap more benefits for the country.
“What we have done is to ensure that, there are changes we have already outlined a number of changes in future Production Sharing Agreements completely different. All of this is geared to improved accountability, to ensure there is greater transparency and to ensure the country itself benefits greater from oil and gas resources,” President Ali added.
American oil giant, ExxonMobil is the operator of the lucrative Stabroek Block, with its partners, Hess Corporation and CNOOC. Exxon and its co-ventures made its first discovery in the block back in 2015 and by December 2019 moved into production phase.
The oil companies already sanctioned five US-multi-billion projects in the Stabroek Block with an investment of over US$50 Billion that they will recover from Guyana’s oil resources. They are currently pumping about 400,000 barrels oil per day with hopes to reach one million bpd by 2029. Exxon is preparing to sanction its sixth oil project in the Stabroek Block.
Meanwhile, there have been many calls by civil society for the People’s Progressive Party/ Civic (PPP/C) administration to bring ExxonMobil Guyana back to the table to carve out a better or more even deal which will garner more benefits for the country.
Former Minister of Natural Resources, Raphael Trotman, who served under the APNU + AFC Coalition government between 2015 and 2020, was the one who signed the deal in 2016 with Exxon. The deal Trotman signed, waives all taxes from the oil companies, gives Guyana a 2% royalty on its rich resources, and agrees to the oil companies recovering 75% of investments before the remaining 25% is shared, with Guyana receiving 12.5%. The arrangement, with the lack of ring-fencing, sees Guyana paying for projects that are yet to commence production activities. Each month bills from future producing developments are added to the list of expenses to be cost recovered by Exxon.
A few months ago, Trotman in his book titled, ‘From Destiny to Prosperity’ offered support to the government to renegotiate the lopsided Stabroek Block deal the country has with an ExxonMobil-led consortium.
Trotman’s offer was refused by Vice President (VP) Bharrat Jagdeo, and the calls by citizens for the deal to be renegotiated have fallen on deaf ears as President Ali as well as VP Jagdeo is adamant that they will not renegotiate the deal because of ‘sanctity of contract’.
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