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Guyana losing more than what it’s gaining without renegotiation of oil contract – Ramjattan
Kaieteur News – Leader of the Alliance For Change (AFC) party, Khemraj Ramjattan has reiterated the need for the lopsided oil contract with ExxonMobil and partners to be renegotiated, noting that failure to do so will see Guyana losing more than it is gaining.
Leader of the Alliance For Change (AFC) party, Khemraj Ramjattan
The former Minister of Public Security told reporters during his party’s weekly press conference on Friday last that the country is losing more by refusing to renegotiate the contract than it has gained through the enactment of the Local Content Law for instance. It was reported that since 2015, ExxonMobil has only spent some US$1.5 billion in contracts procured from Guyanese suppliers.
The People’s Progressive Party Civic (PPP/C) had promised to renegotiate the oil contract and engage all oil and gas companies for better contract management, however the AFC believes it failed to deliver in both instances.
According to Ramjattan, “It is obvious that the country is losing more and that is why we indicated that there ought to be a renegotiation and because of the conduct and utterances whilst they were in opposition that the contract is rotten, that they will renegotiate it- that is the PPP and Jagdeo and all of them- they have now found sanctity of contract to halt all the nonsense that they then said.”
The Member of Parliament in an invited comment by Kaieteur News was keen to note in his response, “If they care about Guyanese and want more monies for Guyanese, they ought to go and renegotiate.” He pointed out that while the administration has now turned its back on the promise to renegotiate the Exxon contract, it has also failed to better manage the existing contract.
Ramjattan said that government has reversed the requirement of an unlimited parent company guarantee to protect Guyana and the Caribbean Region from the costs of an oil spill, and to date have made no progress to independently verify the number of barrels being produced per day by ExxonMobil Guyana Limited (EMGL).
The politician argued “there has been a weakening of all the scaffolding that we had put around the framework” as he referenced the urgent need for the government of Guyana to renegotiate the deal for the country to receive greater benefits from the sector.
Guyana has been repeatedly warned by international energy institutes that the country may never see the promised annual revenues from its oil sector, as the ‘one-sided’ oil contract gives ExxonMobil and its partners the benefit, leaving Guyana and its people out of their fair share of the wealth.
The contract allows Exxon to deduct 75 percent of the resources each month to cover expenses to develop oil and gas projects. The costs that are not covered each month go over to the following month. Presently, Guyana only receives a meagre two percent royalty, as agreed to in the 2016 PSA. This has been described as one of the lowest rates in the World. Royalty is a percentage of total production on any commodity, paid to the owner of the resources and are free and clear from any costs whatsoever. Notably, the country also does not receive taxes from Exxon and its sub-contractors.
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