Several generations will be denied their rightful inheritance with Govt.’s refusal to ring-fence Exxon’s projects - AFC

Several generations will be denied their rightful inheritance with Govt.’s refusal to ring-fence Exxon’s projects – AFC

Jan 10, 2024 ExxonMobil, News, Oil & Gas

– remains one of the most detrimental missteps since PPP assumed office

Kaieteur News – Opposition Parliamentarian and Shadow Minister for the Oil and Gas Sector, David Patterson maintains that the government committed a grave mistake when it rejected his recommendation to include ring-fencing provisions in the Petroleum Activities Law. That legislation was debated and passed last year August.

Shadow Oil and Gas Minister, David PattersonShadow Oil and Gas Minister, David Patterson

In an interview with Kaieteur News on Tuesday, Patterson said the position of the Alliance For Change (AFC) is that all of ExxonMobil’s current and future projects must be ring-fenced.

Unlike the Opposition Leader, Aubrey Norton who is still weighing the pros and cons of ring-fencing, Patterson said he is quite certain that such an approach would be in the country’s best interest. In fact, Patterson said several generations of Guyanese will be denied their rightful inheritance with the government’s refusal to ring-fence Exxon’s projects. It is because of his belief in the benefits of ring-fencing that he insisted on having it enshrined in law last year.

Patterson said, “I called for several changes to be enshrined in the law, rather than in any production sharing agreement which could be adjusted at any time by the minister. Enshrining same in the law governing all petroleum activities provides a safeguard for future generations irrespective of the party in Government.”

Patterson also noted that having ring-fencing provisions in the law would ensure that Guyana reaps more financial benefits on the Liza Phase One and Liza Phase Two Projects currently producing 400,000 barrels of oil per day from the Stabroek Block. He also rejected the government’s excuses for not ensuring the ring-fencing of oil projects.

Patterson said, “The government is parroting Exxon and other oil companies’ excuses – that without ring-fencing that the oil industry would not be competitive; that no ring-fencing encourages investment. However, by not having ring-fencing, the PPP is depriving the nation of billions of US dollars annually.”

He continued, “A prime example is the Liza One and Two development. Despite Exxon having fully recovered their entire production costs (totalling US$7.3B), the 50/50 formula has not kicked in as yet.”

If the ring-fencing formula was in place, Patterson argued that Guyana would have been benefiting from about an additional 110K barrels (US$8M) per day. He said these monies could have been addressing several social ills as well as cost of living challenges. It is with this understanding in mind that Patterson contends the government’s refusal to ring-fence Exxon’s projects remains one of its most grave missteps since assuming office.

To date, ExxonMobil leads a consortium in the Stabroek Block in which 11 billion barrels of oil equivalent resources have been unlocked in the deepwater concession offshore Guyana. Three oil projects are in operation with an output bearing 600,000 barrels of oil per day this quarter.

David Patterson, generations, inheritance, ring-fence, Shadow Oil and Gas Minister

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