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All fixed, movable oil assets belong to Guyana—-Dr. Vincent Adams says contract clear
Kaieteur News- Former head of the Environmental Protection Agency (EPA), Dr. Vincent Adams, has maintained that Article 20 of the 2016 Production Sharing Agreement (PSA) between Guyana and ExxonMobil, shows that all fixed and movable assets belong to the state.
Vice President, Bharrat Jagdeo told the media recently, that the assets do not belong to Guyana, although the American oil giant has already recovered US$34 billion from Guyana’s oil which covers the assets currently being used in production, as well as projects yet to come on stream.
Former Head of the Environmental Protection Agency Dr. Vincent Adams
At the Alliance for Change’s (AFC) weekly press conference on Friday, Dr. Adams was asked by this publication, to explain the true ownership of the assets offshore Guyana, considering the amount of money already recovered by the oil company.
He explained that the situation is very simple as the contract signed was very clear. “At Article 20 all movable and fixed assets belong to the Government of Guyana. It says there that at expiration or termination of the contract, all of these assets shall be returned to the government free of cost.”
The petroleum engineer stressed that if someone is returning something free of cost, then it belongs to the person it was returned to. However, during production, the oil company is allowed to use the equipment, but the cost is being offset from cost oil.
“So, when the vice president comes up with this absolute… you know dumbfounding statements that somehow, we’re going to seize these assets, if we get an oil spill to pay for (cleanup) it’s absolute nonsense and idiocy,” he said.
While there is a recoverable cost, to date, US$34 billion has been recovered and Dr. Adams believes that at least the first four projects was covered. However, the only problem is one can only speculate that Guyana has already paid a total of US$9 billion for Liza One and Two, but cannot definitively say which is which.
Dr. Adams said that this shows “the incompetence and laxity of this government which is how Judge Kissoon described them… you know if you go buy a house you get is what is called an amortization schedule, that says every month you’re paying this amount for interest this amount goes towards your principal and it tells you exactly when you’re going to be finished. We do not even have that. This government cannot even tell us how much we paying in interest or how much is coming out in capital cost, so we do not even know how much of that money that $34 billion actually went into capital cost.”
Last Thursday, the VP declared that although US$34 billion was used to pay for the assets, they are not Guyana’s.
“So first of all, the assets still belong to the company. They don’t change ownership from the company. So, these assets are still working, so what happens is that if you pay off with the assets, then you have more money left now to distribute as profits.”
Jagdeo said that the country does not become the owner of the assets after the costs have been recovered, but still stands to benefit from an increased share of profits as a result.
“So now we will have more money to distribute as profit, because we paid off of the assets. They are off our books. So, what happens is the government’s share of revenue skyrockets, which will happen in future years. So, the assets ownership doesn’t change, it’s just the composition of the distribution, or the share, the proportion of the revenue set aside for distribution, to government and the investor, as profit, their share goes up,” the chief policymaker for the sector informed.
He pointed out that Guyana currently pays 75 per cent towards cost recovery while the remaining 25 per cent is shared with the operator as profits, with the country gaining an additional 2 per cent in royalty.
Jagdeo previously told reporters that Exxon is free to sell the assets paid for by Guyana to handle costs related to an oil spill, as the country is not a co-owner of the infrastructure.
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