Govt.’s management of Exxon contract disgraceful - Opposition

Govt.’s management of Exxon contract disgraceful – Opposition

Apr 20, 2024 News

Opposition Spokesman on Oil and Gas, Elson Low and Shadow Minister of Natural Resources, Shurwayne Holder

…as 6^th project slips by without additional benefits for Guyanese, reserves last updated 2 years ago

Kaieteur News – In its 2020 General Elections’ Manifesto, the People’s Progressive Party Civic (PPP/C) promised not only to renegotiate oil contracts but to engage “immediately” in better contract administration.

Close to four years after it was sworn in to govern the country however, the administration has failed to keep this commitment to its supporters. In its evaluation of the government’s performance, the Opposition described the PPP’s management of the 2016 Production Sharing Agreement (PSA) with ExxonMobil and its Co-Venturers, Hess and CNOOC, as abysmal.

Shadow Minister of Natural Resources, Shurwayne Holder and Opposition spokesman on the Oil and Gas sector, Elson Low gave an assessment of the government’s management of the Exxon contract during Thursday’s press engagement in response to a question posed by this newspaper.

Kaieteur News asked the Opposition members whether there was a move towards better contract administration by the government, since it is now refusing to engage Exxon in a renegotiation.

For his part, Holder told this newspaper, “It is quite the opposite. This administration, first and foremost, rather than to put the information out there to let us know what is happening in the oil and gas industry, they have taken a position of secrecy.”

The Shadow Natural Resources Minister pointed out that the country’s reserves for instance have not been updated by the government since 2022, though it claimed that it receives quarterly reports from the operator of the Stabroek Block on the volumes of crude oil.

Holder argued, “We are still stuck at 11 billion barrels, something as simple as that. Oil discoveries are being made ever so often and we are still stuck there and they are not making any move to inform the nation.”

The Parliamentarian believes that the information is being withheld by the government on specific aspects of the industry which confirms the management of the sector is “going downhill” rather than improving. He was keen to note this was “just on an information basis” adding, “we are not even talking about taking certain actions within the industry so that we can realize more benefit.”

The Member of Parliament explained that the government often boasts of the capping stack requirement in the Environment Permits to mitigate impacts of an oil spill; however the timeline in which that equipment can be deployed offshore has been increased by the PPP. A capping stack is a device placed over a blown out well to prevent the flow of hydrocarbons. Permits granted by the previous administration required that the capping stack be deployed within three days but that has since been increased to nine days.

Meanwhile, Low pointed out, “What we are looking at is an abysmal management of this particular sector.” He said the administration has failed to adequately train and develop the skills of Guyanese to be able to meet the demands of the sector even as more projects continue to be approved for the operator.

According to him, budgetary allocations for the training of Guyanese should have been more aggressive.

Moreover, he said the administration has refused to engage the operator of the Stabroek Block for additional benefits for Guyanese, and has allowed another project to slip by without engaging Exxon in this regard.

Low said, “That is on top of not speaking to the operator at all regarding the additional benefits, or a better way to approach this contract given that you have yet another approval that has slipped by. This is as damning evidence as you can find of the quality of their contract management which they claim was going to be good management.”

The Opposition spokesman on the oil sector therefore noted that Guyana is not benefitting as it should as a result of the poor governance and contract administration by the PPP.

Low in a previous engagement with Kaieteur News said government should engage Exxon, using the terms of the new PSA to seek greater benefits for the country.

The new PSA requires oil companies to pay two percent royalty, 10% taxes and caps cost recovery at 65% each month. This is significantly improved compared to the Exxon deal which only gives Guyana 2% royalty, no taxes and allows 75% of all monthly earnings to cover costs.

contract management, disgraceful, oil, opposition, PSA

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