The controversial Production Sharing Agreement (PSA) signed between the Guyana government and ExxonMobil has been in the headlines in this and other publications for months. Since the contract was released to the public, it came under intense and relentless scrutiny from experts, politicians and Guyanese from all walks of life.
The criticisms were so unrelenting that the President was prompted to say that while there is no prospect for a review of the contract, the matter was engaging the attention of Cabinet. Such confusing remarks have infuriated many, but others were hopeful that there was a chance that the government would convince ExxonMobil to renegotiate the contract.
After the glaring flaws in the contract were duly exposed, one would have thought that the government would be humbled and listened to the people, acknowledged its shortcomings, and let the nation know that its failure to get a better contract was because of ExxonMobil’s refusal to renegotiate the 1999 contract signed by the PPP government.
Oil was not discovered when that contract was signed, but with the discovery of oil in 2015, the government should have forced ExxonMobil to negotiate a totally new and fairer agreement. ExxonMobil would have either agreed to renegotiate the contract or leave. Choosing the latter option would have allowed the government to engage other oil companies.
This government does not have any experience in negotiating an oil and gas contract with a multinational such as ExxonMobil, which has a wealth of experience in contract negotiations, and cleverly used that to exploit the poor negotiating skills of the government negotiators. Consequently, the paltry two percent royalty and the meagre US$18 million signing bonus which the government managed to squeeze from ExxonMobil is negligible. Since the discovery of oil, ExxonMobil stocks have increased significantly on the global exchange. One estimate put the amount at between US$16 billion and US$22 billion.
It is clear that ExxonMobil has benefited immensely from the contract, which states that the laws of Guyana are ancillary, because they are inconsistent with the rules of international customs and laws with regards to the petroleum industry. That said, numerous calls from prominent individuals and oil experts, including the petroleum adviser to the President, Dr. Jan Mangal, to renew the contract, have been rejected. The Minister of State has said that the contract is final and will not be subject to any changes. This shows that inclusionary democracy in Guyana is a farce. The truth is, oil does not belong to the government, it belongs to the people.
The forfeiting of Guyana’s oil and gas resources to the US oil giant amidst the loud and growing concerns of an uneasy public is now being tempered by the prudent pronouncement by the Minister of Natural Resources, who said that the government will hire an overseas firm to guide and advise it on how to market the unassigned oil blocks.
While this will appease many, others believe that it came too late. Instead of hiring a foreign company to market the unassigned oil blocks, the government should assemble a bipartisan committee to do so. It is hard for anyone to believe that a government with so many lawyers would accept such a contract.
History will judge this government harshly for not heeding the words of one of our late presidents who said: “We have seen in Guyana and in other underdeveloped countries how foreign extractive industries prosper while the native population remains poor and destitute. We must get the large share of the cake; otherwise what is the difference between Guyana and a colony. What would we tell our children….Assistance we shall accept, partnership we shall welcome, but the show must be ours, we will dictate the priorities and the directions, we shall rely primarily on us…That is self-reliance.”
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