Latest update December 17th, 2024 3:32 AM
Govt. urged to formally write Exxon to initiate renegotiation process
Kaieteur News- Former Minister of Finance, Winston Jordan, is urging the Government of Guyana to initiate the process for a possible renegotiation of the 2016 Production Sharing Agreement (PSA) with ExxonMobil Guyana Limited.
Exxon’s Guyana operator holds 45 per cent interest in Guyana’s lucrative Stabroek Block, which is 6.6 million acres and has 11.6 billion barrels of oil. Hess Guyana Exploration Ltd. holds 30 per cent interest and CNOOC Petroleum Guyana Limited holds 25 per cent interest. The 2016 deal gives Guyana an industry-low 2% royalty. Presently, Guyana shares revenue with ExxonMobil after the company deducts 75 per cent towards the cost incurred to develop the resources in the Stabroek Block.
Former Finance Minister, Winston Jordan
During the People’s National Congress (PNCR’s) Nation Watch programme, on Sunday, Jordan said, “I see nothing wrong in writing to Exxon, initiating the process of renegotiating the contract; until you do that you do not know what will be Exxon’s response, you don’t know.”
While the current government has acknowledged 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. In response to this, Jordan explained that it is known that the contract provides for a mutual agreement between government and Exxon, before the contract can be amended. “We know that is both of us that have to clap hands to come to an agreement. So, I will initiate it and we will come to the table and let us see what is in it for me what is in it for you. That is what I see. Okay, if the negotiations go south, they go south, but you can’t just keep sitting down and hollering sanctity of contract,” he added.
ExxonMobil Guyana President, Alistair Routledge
ExxonMobil Guyana President, Alistair Routledge, has defended the heavily criticized deal it signed with the previous Coalition Government for the lucrative Stabroek Block. Last month, in an interview with Financial Times, Routledge defended the contract, saying the terms were competitive for a deep water, frontier development that had attracted limited interest until the big recent discoveries. Just two companies – Hess and CNOOC – replied to 35 letters sent out by Exxon seeking partners when Shell pulled out of the consortium in 2014, he said. Routledge said returns to Guyana could exceed US$10 billion over its operations’ decades-long lifetime. There would be no renegotiation of the agreement as “contract sanctity is super important for investors,” he added. “Everybody can cherry pick certain things but at the end of the day, it’s a collective economic return … for an economy [whose current] national budget is only around US$3.5 billion -US$4 billion. It is quite transformational,” he said.
President Dr Irfaan Ali
Further, during Exxon’s last press conference with the media, Routledge made it clear that Exxon is not open to renegotiating the oil contract. He was asked about using the provision in the contract that caters for Guyana and the company to mutually agree to renegotiate the contact. He said, “We have no interest to invoke that Article. As I say, we’ve made US$55 billion worth of commitment to the country. To go back and to undermine the basis of that investment would seriously challenge any future investments.”
(Govt. urged to formally write Exxon to initiate renegotiation process)
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