Fmr. Pres Ramotar says he would have renegotiated lopsided Exxon deal

Oct 06, 2023 ExxonMobil, News, Oil & Gas

…says better to fight than to not fight at all

Kaieteur News – Former Guyanese President, Donald Ramotar recently stated that he would have renegotiated the lopsided deal Guyana signed onto with U.S oil major ExxonMobil – underscoring that “it’s better to fight than not to fight at all.”

Former Guyanese President, Donald Ramotar

President of Guyana, Irfaan Ali (Aaron Davidson/Getty Images)

Since the 2016 Production Sharing Agreement (PSA) was made public, there have been calls by locals as well as industry experts for Guyana’s leaders to bring Exxon back to the table and carve out a deal that would share equal benefits from the lucrative Stabroek Block. While President Irfaan Ali and Vice President Bharrat Jagdeo have taken a firm stance against renegotiating the contract, Ramotar revealed his disagreement during a discussion moderated by Dr. Asquith Rose. Ramotar described the current contract as detrimental, depriving Guyana of vital resources, and expressed his willingness to renegotiate for the country’s benefit.

The former head-of-state said, “I am one of the persons who believes that the contract is a very bad contract…that deprives us of a lot of resources.” As such, he continued by stating that he would have been in agreement to renegotiate the deal to seek more benefits for the country. To this end, Ramotar acknowledged the current administration’s reluctance to change the existing deal while noting that they have explored alternative avenues to maximise benefits for the nation.

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.

Lopsided Deal

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.

Vice President (VP), Bharrat Jagdeo

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 Jagdeo, and the calls by citizens for the deal to be renegotiated have fallen on deaf ears as President Ali and VP Jagdeo are adamant that they will not renegotiate the deal because of ‘sanctity of contract’.

Moreover, on September 11, President 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.

This publication had reported that during the interview, the Head-of-State was asked, “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.