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Governments have a responsibility to get the best deals, revenue streams from resources – T&T Energy Minister
T&T Energy Minister, Stuart Young
Kaieteur News – Minister of Energy and Energy Industries in Trinidad and Tobago, Stuart Young recently impressed the need for governments to secure the best deals for their people.
Young was at the time delivering remarks at Guyana’s third annual Energy Conference, hosted at the Marriott Hotel, Georgetown from February 19 to 22.
The Trinidadian Minister told participants of the conference, including top government officials here that, “It is the people’s resources and we as the elected governments have the responsibility to do the best that we can to get the best revenue streams for them, and the best deals for them, which includes responsible exploitation of these resources.”
To this end, the Trinidadian politician told participants that the government of T&T has successfully renegotiated almost all of its gas deals to ensure the people of Trinidad receive greater value for their resources.
Here in Guyana, the government has refused to engage the operator of the Stabroek Block, ExxonMobil for a better deal. Citizens have been protesting for changes to the lopsided arrangement but while government has accepted that the contract is one of the worst deals ever, it is still reluctant to renegotiate better terms. The government believes that Guyana must abide by the ‘sanctity of contracts’ principle, since this can “chase investors”.
Trinidad’s Energy Minister has extended the country’s negotiation expertise to Guyana and Suriname, encouraging the countries that no investor has ever left the twin island due to a renegotiation.
“We in Trinidad and Tobago have spent the last seven years of our term successfully negotiating, and I can say here without fear of contradiction, every contract that we negotiated augurs better in direct revenue for the people of Trinidad and Tobago and the multinational oil and gas companies have not got up and run off. They continue to invest because it is all about respect and fairness of relationships and I offer that here to Guyana and to Suriname in a collaborative approach because you see I am convinced that if we work together to change the dynamics,” Young told the conference.
The 2016 Production Sharing Agreement (PSA) Guyana inked with ExxonMobil and partners, Hess and CNOOC allows the Contractor to deduct up to 75 percent of Guyana’s oil each month to recover the cost of their investments. This process is known as cost recovery. The remaining 25 percent is then split with Guyana, meaning that the country receives a meager 12.5% of profits. Guyana also receives 2 % royalty, while Exxon and its contractors benefit from a tax-free holiday and the absence of a ring-fencing provision.
A ring-fencing provision would mandate each project to pay for itself and would allow Guyana to benefit from 50% of the revenues each month after the costs have been repaid. In the absence of this key provision, Guyana allows Exxon to use the revenues from producing projects to develop other projects.
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