The Vice President’s flawed excuses on renegotiating the oil agreement

Jul 09, 2024 Features / Columnists, Peeping Tom

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Kaieteur News – In recent months, Vice President Bharrat Jagdeo has been vehement in his stance against renegotiating the Production Sharing Agreement (PSA) between the Government of Guyana and ExxonMobil. His arguments, ranging from concerns about investor confidence to the sanctity of contracts, have been laid bare for their lack of substance.

The Vice President’s excuses for not renegotiating the PSA with ExxonMobil have been thoroughly debunked. Article 31.2 of the agreement provides a clear pathway for renegotiation, and there are compelling reasons to pursue this course of action. The government’s current stance not only fails to capitalize on this provision but also raises serious questions about its motivations.

Article 31.2 of the PSA unequivocally states that the contract can be amended or modified through mutual written agreement by all parties involved. Article 31.2 of the PSA clearly articulates: “This Agreement shall not be amended or modified in respect except by written agreement entered into by all the parties which shall state the date upon which the amendment or modifications shall become effective.”

This clause debunks any assertion that renegotiation is off the table and exposes the Vice President’s reluctance to call ExxonMobil to the negotiating table as a position without merit. The presence of this clause indicates that the parties anticipated the possibility of changes over the contract’s lifespan. It acknowledges the right to renegotiate, a common practice in long-term agreements where circumstances can evolve.

In long-term agreements, renegotiation clauses are added to provide flexibility and adaptability in response to changing circumstances over time. These agreements often span several years or even decades, during which economic conditions, market dynamics, regulatory environments, and other relevant factors, including the national interest, can evolve significantly. By including renegotiation clauses, the parties involved also acknowledge that the initial terms may or are inequitable. Renegotiation allows for the terms of the agreement to be revisited and adjusted, ensuring that the contract remains fair and functional throughout its duration.

Jagdeo needs to understand that without renegotiation clauses, parties might feel compelled to take drastic measures, such as breaching the contract or pursuing legal action, to address their concerns. Renegotiation clauses, therefore, create a formal process for dialogue and adjustment.

If renegotiation were not intended, there would be no necessity for such a provision. The clause essentially provides a framework for modification, ensuring that any amendments are mutually agreed upon and documented. Therefore, the onus is on the Government of Guyana to initiate discussions with ExxonMobil, a step that Vice President Jagdeo has been conspicuously avoiding.

One of the primary arguments of the PPPC against renegotiation is the fear that it might deter future investors. However, this concern is unfounded. Renegotiation, as stipulated in the PSA, is a legitimate and lawful process. It is not an arbitrary or unilateral alteration of the contract terms but a consensual modification.

The sanctity of contracts argument, used by Jagdeo, suggests that any attempt to renegotiate would violate the agreement’s integrity. This is a misinterpretation of the contractual provisions. Renegotiation is not a breach but an exercise of a right explicitly included in the contract.

As Dr. Vincent Adams aptly put it, “when I hear people say we can’t renegotiate, that’s absolute nonsense.” The clause exists precisely because there is a possibility and sometimes a necessity for renegotiation.

The practical implications of renegotiating the PSA are significant. Guyana stands to gain a more favorable share of the oil revenues, ensuring that the country’s natural resources are harnessed for the maximum benefit of its people. The current terms have been widely criticized for being disproportionately advantageous to ExxonMobil, a situation that renegotiation could rectify.

Given the clarity of Article 31.2 and the strong arguments in favor of renegotiation, Vice President Jagdeo’s reluctance raises critical questions. What are the underlying reasons for his refusal to initiate renegotiation discussions?  This is a question that the people of Guyana must now ponder.

The Vice President’s position undermines the potential economic benefits for the country. If the government is unwilling to leverage the provisions of the PSA to renegotiate better terms, it is imperative to scrutinize the motivations behind such a stance.

The government, led by Vice President Jagdeo, should be pressed to explain why they are not utilizing the renegotiation clause to secure better terms for the nation. Public pressure can play a crucial role in compelling the government to act in the country’s best interests.

Civil society organizations, opposition parties, and concerned citizens should unite in advocating for a renegotiation of the PSA. This is not merely about economic terms; it is about ensuring that the wealth generated from Guyana’s natural resources benefits the nation and its people, rather than disproportionately favoring foreign corporations.

It is time for the Government of Guyana to act decisively and initiate renegotiation discussions with ExxonMobil. This is a matter of national interest and economic justice. The people of Guyana deserve to benefit fully from their natural resources, and it is the government’s duty to ensure that this happens. You, the people, have to demand no less.

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• agreement, Bharrat Jagdeo, Peeping Tom, renegotiating, Vice President

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