No evidence of corruption to support investigation into lopsided 2016 oil deal with Exxon – Min. Teixeira

Mar 20, 2024 ExxonMobil, News, Oil & Gas

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Kaieteur News – Minister of Parliamentary Affairs and Governance, Gail Teixeira on Tuesday told the United Nations Human Rights Committee that there is no evidence of corruption to support an investigation into the lopsided 2016 oil deal with American oil giant, ExxonMobil.

Minister Teixeira was at the time making her second appearance before the UN Human Rights Committee (CCPR) at its 4099^th Meeting, 140^th Session. Committee Member Helene Tigroudja asked, “I would like to ask whether an in-depth inquiry has been conducted into accusations of corruption by ExxonMobil (Guyana Limited) in the wake of granting by the government of a permit to exploit oil deposits in Guyana?”

In her brief response to the question, Minister Teixeira acknowledged public concerns but noted the lack of tangible evidence to support such claims of corruption. “The question was asked on the 2016 Production Sharing Agreement that was signed and secretly signed, there has been no investigation between 2016 and 2020 of that and none from then to now. There may be many concerns that people have, and may even be convinced that there was some sort of cozy relationship. However, there is no proof or evidence that we can move forward on this,” she said.

The CCPR oversees the International Covenant on Civil and Political Rights, ensuring member states implement its provisions. Through its work, it fosters changes in law, policy, and practice, improving lives worldwide and advocating for the universal enjoyment of civil and political rights without bias.

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 the production phase.

In 2016, the PSA was signed with the oil major. That deal has been heavily criticized for being lopsided and benefiting the oil company more than 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 heavily criticized lopsided PSA with Exxon. The 2016 deal gives Guyana an industry-low 2% royalty. Presently, Guyana shares revenue with ExxonMobil after the company deducts 75 percent towards the costs incurred to develop the resources in the Stabroek Block. This arrangement, with the lack of ring-fencing, sees Guyana paying for projects that are yet to begin production activities. Each month bills from future producing developments are added to the list of expenses to be cost recovered by Exxon. After the 75 percent is deducted to pay back the oil company, Guyana then shares 50/50 of the 25 percent remaining with Exxon as profits. This amounts to 12.5 percent of profits from the operations.

Also, under the signed deal, Guyana has agreed to, under the taxation provisions, to pay ExxonMobil’s share of Corporation and Income Tax. As such it would mean, that Guyana foregoes each year, billions of US dollars. Further, documentation to this effect is then provided to the US-based company allowing it to not have to pay any taxes in its home country for its earnings overseas.

Since the deal was made public, there have been many calls by civil society for the administration to bring ExxonMobil Guyana back to the table to carve out a better deal which will garner more benefits for the country.

While in opposition, the People’s Progressive Party/ Civic (PPP/C) promised to renegotiate the deal should the party return to power. However, since assuming office in August 2020, the government has repeatedly said that it never made a promise to do so, specifically for that contract.

In fact, though Vice President Bharrat Jagdeo has maintained that the mere 2 percent royalty, massive tax breaks, and the absence of a ring-fencing provision, are three key flaws of the 2016 Stabroek Block PSA, his government will not seek to renegotiate the deal. The government has cited ‘Sanctity of Contract’ as the reason not to change the Exxon deal. During a September interview with the British Broadcasting Corporation (BBC), President Irfaan Ali reiterated his administration’s stance on not renegotiating the Exxon deal, acknowledging its imbalance in favour of the oil major.

He said, “Well, I would say definitely, we did not have the best of deals, Exxon has a good deal signed by the last government.”

Ali then highlighted that sanctity of contract is “very important” to his Government, adding, “we can’t go back on that.”

“We cannot go back and renegotiate,” President Ali said noting 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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• Exxon, Guyana, lopsided, oil, PSA

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