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Article 32.3 circumvents our Sovereign Powers

Jan 03, 2025 Letters

Dear Editor,

There was a recent letter in the press questioning the impact that Guyana could have on localized climate change. It is important to remember that in Guyana, Exxon is targeting a very aggressive production rate of 1.7 million barrels per day by 2030 (reference: oil now).

This target when achieved will place Guyana ahead of the current level of several OPEC countries including Libya, Venezuela and Oman. The target also surpasses the current level of the UK. Our location and the current delicate situation in the region increase the risk exposure that will result from this aggressive target that has been set by Exxon. This excludes other Oil companies coming online, which will add to the risk of increased exposure to the negative effects of localised climate change.

However, it should be noted that Article 32.3 of the production agreement should be reviewed for its legality independent of whether one believes in the risk of localized climate change. The key issue with the article has to do with the circumventing of sovereign powers and the limiting of the Government’s ability and the Judiciary’s ability to protect the public interest. Therefore, it is of utmost importance that the House of Parliament discuss article 32.3 and have it brought before the courts for consideration.

Article 32.3 states, “If at any time after the signing of this Agreement there is a change in the laws of Guyana whether through the amendment of existing laws (including the hydrocarbons law, the customs code or tax code) or the enactment of new laws or a change having the force of law in the interpretation, implementation or application thereof (whether the change is specific to the Agreement, the Contractor or of general application) and such change has a materially adverse effect on the economic benefits, including those resulting from the fiscal regime provided by this Agreement, accruing to the Contractor hereunder during the term of this Agreement, the Government shall promptly take any and all affirmative actions to restore the lost or impaired economic benefits to Contractor, so that Contractor receives the same economic benefit under the Agreement that it would have received prior to the change in law or its interpretation, application, or implementation.

 The foregoing obligation shall include the obligation to resolve promptly by whatever means may be necessary any conflict or anomaly between this Agreement and any such new or amended legislation, including by way of exemption, legislation, decree and/or other authoritative acts”. (Reference: 2016 Petroleum Agreement between ESSO, CNOOC and HESS)
Even the interpretation of the law is circumvented by this article. The Article in question has attempted to prevent any change to the stability of the agreement from that which existed at the time of signing, but it has done so in a way that would allow it to remain in breach of the law if such a breach is determined. Worse, is that if the contractor does not agree with the decisions of the Government or the Courts of Guyana then the contractor may proceed to arbitration as outlined in the ensuing article. This process reduces the authority of the Judiciary and the Government in the management of the Nation’s affairs.

As previously mentioned, CRG calls upon the House of Parliament to discuss this matter and have it brought before our Nation’s courts for consideration.

Best regards,

Mr. Jamil Changlee

(Article 32.3 circumvents our Sovereign Powers)

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