Pres. Granger says... ExxonMobil contract back with Cabinet

Pres. Granger says… ExxonMobil contract back with Cabinet

Feb 15, 2018 News

President David Granger

Amid growing unhappiness over the 2016 Production Sharing Agreement (PSA) between Government and U.S. oil giant, ExxonMobil, President David Granger yesterday disclosed that the matter is engaging Cabinet.
The President was asked by Kaieteur News, specifically, if Government is prepared to review the contract based on public requests.
“These matters are before Cabinet and it depends on what determination the Cabinet arrives at,” the President responded. He further stated that the contract is an agreement between two parties and ‘these things’ have to be approached very carefully.
“There is no prospect at the present time that it is the intention of Cabinet to review it, but as I said, it is before Cabinet,” the President stated.
Since the PSA was made public in December last, there have been daily revelations in the media over clauses in the agreement that raise several burning questions relating to the offers ExxonMobil received, including 2% royalties, zero taxes on oil production, uncapped tax concessions on imports and the limited powers of related institutions and government agencies to effectively oversee Exxon’s operations.
Social and political commentators have pointed to glaring flaws that led to the conclusion that Guyana got a poor, lopsided oil contract deal by international standards.
At the centre of the whirlwind to renegotiate the contract is Minister of Natural Resources, Raphael Trotman whose signature appears on the 2016 PSA on behalf of Government. Last week, Trotman told Kaieteur News that he takes his direction from Cabinet.
“At the time that I signed as a Minister, I was both advised and instructed to do so. I work as a Minister in a Cabinet, and therefore if there is ever a decision to renegotiate that would have to be told to me,” the Minister stated.
Last Wednesday, Petroleum Advisor to the President, Dr. Jan Mangal publicly disclosed that the PSA provisions that provide for 2% royalty and zero taxation on Exxon’s share of oil production were not in keeping with the international norm for oil contracts.
Initially, Government shared the viewed that Guyana got the best deal it could have in the circumstances, and there was no reason to renegotiate, but in recent weeks the tone appears to have shifted.
The petroleum advisor shared the view that the PSA can be renegotiated and highlighted the important role civil society and the wider population can play in ensuring the best outcomes in the oil and gas sector.
Dr. Mangal had pointed out that contracts should always be reviewed as new information becomes available. He stated that the question of renegotiating the contract is one that the people of Guyana must answer, and emphasised that this discussion must continue. He also disclosed that he will be preparing a white paper on the oil and gas sector for submission to President Granger, shortly.
Dr. Mangal has spent 18 years in the industry, 13 of them with Chevron working on major oil and gas projects in the United States, West Africa and Asia.