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US Ambassador: changing agreed deals sends ‘bad signal’ to investors
(Kaieteur News) – United States Ambassador to Guyana Nicole Theriot has warned that it sends a “terrible signal” and is a “bad idea” for a country to renegotiate a contract that has already been agreed. She made that comment when asked if the U.S government supports a change to the contract Guyana has with American company ExxonMobil.
Speaking during a recent episode of SOURCES with journalist Svetlana Marshall, Theriot said renegotiating an already agreed contract could undermine investor confidence at a critical time for the country’s economic expansion.
United States Ambassador to Guyana, Nicole Theriot
The Production Sharing Agreement (PSA) for the Stabroek Block was signed in 2016 by the previous APNU+AFC Coalition government. Under the agreement, up to 75 per cent of oil production is used to recover costs, the remaining 25 per cent is considered profit and is split equally between Guyana and the consortium, giving each 12.5 per cent. However, the consortium pays a 2 per cent royalty from its share to Guyana. From Guyana’s 14.5 per cent total take, the government must pay the oil companies’ taxes.
“So as the representative of the US government, I can tell you, it’s incredibly dangerous to start talking about renegotiating a contract that’s been agreed upon,” Theriot responded.
She continued, “That sends a terrible signal to international investors all over the world, that you can’t trust what you’ve signed with a government that’s willing to renegotiate.”
The U.S Ambassador further noted that such a move by Guyana would send a negative signal to potential investors, especially at a time when Guyana is looking to attract more foreign investment into the country. “It’s a very bad idea,” she added.
Her comments come against the backdrop of local debates over the 2016 PSA, and calls for the government to bring the oil major back to the table to renegotiate the contract.
The People’s Progressive Party government has criticised the PSA but has maintained that it will not renegotiate the contract.
ExxonMobil Guyana Limited (EMGL) operates the Stabroek Block in partnership with Hess and CNOOC. The Stabroek Block is estimated to hold some 11.6 billion barrels of oil. Exxon and its partners Hess and CNOOC began pumping oil in December 2019, and today with four projects in operation is producing close to a million barrels of oil daily.
Addressing concerns about whether Guyana is receiving a fair deal under its oil agreements, Theriot said while she is not in a position to assess the contract itself, the overall impact has been positive.
Stabroek Block
She noted that Guyana is already seeing tangible benefits from its oil boom, pointing to community projects, corporate sponsorships and training initiatives funded by ExxonMobil.
“But from my perspective, I think it’s been incredibly beneficial to both sides…just look around when I travel around the country. In fact, I was just in Region One this weekend. I was at Shell Beach and in Mabaruma and in Imbotero and anywhere you look, you will see signs saying, at the bottom, it will say supported by ExxonMobil. They are doing incredible work all over this country,” she stated.
Moreover, she pointed to initiatives such as Exxon’s sponsorship of the Guyana Amazon Warriors (GAW) for the Caribbean Premier League (CPL) and a recently signed US$100 million agreement to support Science, Technology, Engineering and Mathematics (STEM) development over the next decade. She added, “So many things that are happening in this country for the good are because you have these U.S. companies here and specifically, you have that ExxonMobil consortium.”
The Ambassador maintained that these efforts demonstrate tangible benefits for Guyanese, particularly in education and youth development.
“I think absolutely. There’s no doubt for me that Guyanese are benefiting… so those are just small examples, but I definitely think it’s been a win-win for both of our countries,” Ambassador Theriot stated.
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US Ambassador sticking herself in Guyana’s problems un-necessarily.
If it’s not the ongoing case of the Mohameds, it’s the oil agreement.
I guess she wouldn’t re-negotiate HER rental agreement for housing if she
is unable to pay the rent in a scenario.