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‘Pres. Ali made it clear no renegotiation of Exxon contract’ – Hess boss tells conference
Kaieteur News- The renegotiation of the 2016 Production Sharing Agreement (PSA) governing the Stabroek Block which is estimated to hold 11.6 billion barrels of oil, has been a contentious topic.
Hess Corporation’s Chief Executive Officer (CEO), John Hess, a company that holds 30% interest in the Stabroek Block, speaking at the Goldman Sachs Research “Energy, CleanTech & Utilities Conference,” last week assured stakeholders of political and fiscal stability in Guyana ahead of the planned 2025 General and Regional Elections.
Hess Corporation’s Chief Executive Officer (CEO), John Hess
He emphasised the People’s Progressive Party/Civic government’s commitment to honouring the Stabroek Block deal and similar support from the Opposition’s camp in relation to the extraction and development of the oil and gas resources. Hess recounted, “Last week someone asked President [Irfaan] Ali about, ‘Are you going to use the election as a catalyst to renegotiate the contract?’ and he was categorically very, very clear no, ‘No, we are not going to touch the production sharing agreement.’”
Hess underscored that the government wants the Stabroek Block joint venture to continue to aggressively invest to transform the oil wealth into the people’s wealth. “So I see the political risk there being very low and the fiscal risk being very, very low,” he added.
Hess’ reference were comments made by President Ali during his end-of-year press conference, when he told the media that he has no interest in writing U.S. oil major, ExxonMobil to engage the company to renegotiate the PSA.
President Ali’s current stance contrasts with statements he made as the PPP/C presidential candidate.
ExxonMobil Guyana Limited (EMGL) operates the Stabroek Block in partnership with Hess and CNOOC. The agreement exempts the oil companies from paying taxes directly, with Guyana covering these costs, and allows the companies to recover up to 75% of their investments before the remaining 25% is split. Of this, Guyana receives 12.5%, in addition to a 2% royalty paid by the oil companies.
President Irfaan Ali. (no renegotiation of Exxon contract)
During an interview while running for president back in March 2020, Ali had strongly criticised the PSA signed by the Coalition Government with ExxonMobil. He stated at the time, “We have made it very clear, and we can never agree, how could, how could, I don’t think any Guyanese agree with this, no Guyanese except the government that is defending it. We have made it very clear that we have to go towards, we’re looking at these contracts, renegotiating these contracts, looking at contract management and all of these things. Everything we have to relook at because we have to ensure that our country does not get the wrong end of the stick.”
Ali’s remarks back then indicated a willingness to “review and renegotiate” the contract to secure better terms for Guyana. However, since assuming office, his administration has shifted to upholding the “sanctity of contract”. The Hess Corporation CEO has leveraged President Ali’s stance to stress that their operation in Guyana has low fiscal and political risks associated with it.
(‘Pres. Ali made it clear no renegotiation of Exxon contract’ – Hess boss tells conference)
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