Pres. Ali attacks former Pres. Donald Ramotar for supporting renegotiation of lopsided ExxonM deal

Oct 08, 2023 ExxonMobil, News, Oil & Gas

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Kaieteur News – President Irfaan Ali has criticized recent statements made by former President Donald Ramotar on the renegotiation of the lopsided deal Guyana signed with U.S. oil major, ExxonMobil.

On Friday, this publication reported that the former President said he would have renegotiated the lopsided deal – underscoring that “it’s better to fight than not to fight at all.”

However, President Ali during his address at the Guyana-Canada Chamber of Commerce Maple Leaf Ball on Friday night, addressed the criticism while not naming Ramotar.

Ali said, “You know everybody is a specialist now. Whether you’re former president or president, you’re whoever, engineer or owner of Beharry Group, everybody specialized now.”

He continued: “I don’t spend my time on negative energy but it’s tiring to listen to some of these guys. You want us to change the contract. You have an existing contract. You think that is how it happens. That is how the world operates. That you can just walk in one day and decide I had this contract with you. I’m changing it now.”

Ali contended that if such a move is taken Guyana can face legal repercussions from the oil major for not honouring the contract.

“This is not play thing, and some of these guys were policymakers. To believe that, you know, fanciful is nice and exciting and very popular to say we can change the contract. That is why we were very careful to say that we have to learn from the mistake and ensure that future contract does not make the same mistake and that is what we have done that is what you are doing,” President Ali said.

Furthermore, President Ali stressed the importance of maintaining investor confidence, explaining that sophisticated investors observing the situation might lose faith in the system if contracts were changed. Ali added that such move would cause investors to say, “you can’t depend on them [Guyana].”

President Ali acknowledged the challenging hand that Guyana had been dealt in relation to the Exxon deal, but emphasized the administration’s commitment to ensuring that future dealings were more favourable to the country.

He said, “But everybody wants a front page now. Some of them had plenty years to change it. But they want a front page now. The easiest thing to get on the front pages here, I suppose is changing the contract. For God heaven’s sake, I wish if it was a better contract. All of us wish that.”

Moreover, President Ali urged a realistic approach over opportunism.

While President Ali has maintained a firm stance against renegotiating the existing Production Sharing Agreement (PSA) signed in 2016, the debate rages on. Calls from locals and industry experts have urged Guyana’s leaders to reopen negotiations with ExxonMobil and its partners, Hess Corporation and China’s CNOOC, to ensure more equitable benefits from the lucrative Stabroek Block.

Last Monday, 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 stated that he would have been in agreement to renegotiate the deal to seek more benefits for the country.

ExxonMobil is the operator of the lucrative Stabroek Block, with its partners, Hess 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.

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’s (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.

Responding to a question, 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.

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• Donald Ramotar, Exxon, Former President, Irfaan Ali, President of Guyana, renegotiation

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