Norton promises to review Exxon’s oil deal, ring-fence projects, impose taxes and reinstate parent company guarantee for oil spill if elected

Sep 26, 2024 News

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By Renay Sambach 

Kaieteur News – Leader of the People’s National Congress Reform (PNC/R), Aubrey Norton, has promised to review the lopsided 2016 Production Sharing Agreement (PSA) that was signed by the Coalition Government of which he was part of with US oil major ExxonMobil.

ExxonMobil Guyana Limited (EMGL) is the operator of the lucrative Stabroek Block, with its partners, Hess Corporation and CNOOC. While the Government of Guyana (GoG) has acknowledge that the deal benefits the oil companies more than it does the country – the Irfaan Ali-led administration has taken the stance to not make changes to the contract, touting sanctity of contract.

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 deal in 2016 with Exxon. The deal Trotman signed, waives all taxes from the oil companies and caters for the taxes to be paid by Guyana, it gives Guyana a 2% royalty on its rich resources, and agrees to the oil companies recovering 75% of investments before the remaining 25% is shared, with Guyana receiving 12.5%. This publication had also reported that the deal lacks a ring-fencing provision.

On Wednesday during a press conference, Norton made the announcement of the “PNCR/APNU’S Policies, Strategies and Principles for the Development of the Oil and Gas Sector,” which is a 20-point’ oil and gas policy. The announcement of this policy comes ahead of the 2025 General and Regional Elections.

Norton, who has shied away from saying if elected he will “renegotiate” the contract on Wednesday outlined the coalition’s key strategies for managing the oil and gas sector, with a heavy emphasis on ensuring Guyanese benefits more from its abundant oil resources. He said, “Consistent with Article 32.1 of the PSA, we will complete a top-to-bottom review of the PSA and then engage the Stabroek Block Partners, to maximise the benefits of the oil resources to the people of Guyana while ensuring a fair share of profit for Stabroek Block Partners.”

According to the Leader of the Opposition, the review will include several aspects that have resulted in Guyana losing out on additional resources. The party plans to implement an oil tax regime that would impose taxes on profits, a move that many critics have called for but which is not currently part of the PSA. This publication recently highlighted that owing to the 2016 PSA, Guyana has foregone around $306 billion in taxes for Exxon, Hess and CNOOC for 2023, while the country only earned $336 billion from oil sales and royalties for that same year. “Every aspect will be involved in the review, so we will seek to review the entire PSA with the aim of ensuring the Guyanese people benefit,” Norton said in response to a question about the current non-tax provision in the PSA.

Another key area the PNCR leader highlighted is the party’s intention to introduce a ring-fencing provision. In the absence of ring-fencing, Exxon is allowed to charge Guyana for new wells/ projects before they start producing oil. This results in a reduction of the profits that would be available to split between the government and the oil company. “The review will include, but not be limited to…environmental responsibilities, decommissioning, transparency, the timely reporting of information, regulatory oversight and real-time monitoring, auditing, local content, shared management and decision-making in operations in the oil and gas sector,” he added.

Additionally, Norton stated that as the next coalition government they reinstate the parent company guarantee that would ensure full liability coverage in the event of an oil spill. He said the guarantee would require EMGL’s parent company to cover the costs of any environmental disaster fully.

Environmental responsibilities

The PNCR/ APNU oil and gas policy places emphasis on environmental responsibilities, transparency, and regulatory oversight. Norton underscored the importance of strengthening the Environmental Protection Agency (EPA) to ensure better management of the oil and gas sector, with a focus on prohibiting gas flaring, re-injecting toxic water according to international standards, and conducting a cradle-to-grave waste management plan. “We will review the existing drafts of the Petroleum Commission Legislation and restructure as necessary to finalise the establishment of an independent/autonomous Petroleum Commission equipped with the highest caliber fit-for-purpose professionals, to manage the O&G sector from application for licenses through auction, exploration, production, sales, refining, and gas utilisation for energy conversion,” Norton said.

He noted too that they will conduct a review of the Natural Resources Fund (NRF) with the aim of restructuring it to ensure its independence, management, and the fulfillment of its mandate.

Moreover, the PNCR leader also stated that they would also explore the feasibility of establishing a National Oil Company (NOC and/local refinery to enhance Guyana’s economic benefits from the sector. Additionally, Norton promised to conduct feasibility studies for the utilization of natural gas and to develop a strong local content policy to ensure that local businesses benefit from the sector’s expansion.

He said too, “We will govern and manage the oil and gas sector in the best interest of the people of Guyana and in accordance with the rule of law.”

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• Aubrey Norton, elected, guarantee, parent, People’s National Congress/ Reform (PNC/R)

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