– ExxonMobil can terminate at anytime but OAI cannot impose termination
– Arbitration has to be done in T&T
– Fees for land considered “generous”
ExxonMobil is expected to begin construction of its local headquarters by next week at the Eugene F. Correia Airport. Such a venture has been made possible by the Ogle Airport Inc (OAI). The company gave ExxonMobil access to 10 acres of land while several small local operators continue the years-long wait to access land.
ExxonMobil’s local subsidiary, ESSO signed a Memorandum of Understanding (MoU) with OAI on July 27, 2017. ExxonMobil will now be in control of the land for a minimum of 30 years.
The airport land is owned by the State and the period granted by OAI to ESSO exceeds the Government’s Master Lease timeline by 20 years. Therefore, OAI’s kind offer to ExxonMobil had to receive the blessings of the APNU+AFC Government. Kaieteur News saw a copy of the signed MoU.
In this document, OAI agreed, during the tenure of the MoU, to not offer the use of the land to anyone without ESSO’s consent. Aviation operatives at Ogle say that this action is in complete contrast to “the strong-arm tactics and threats of repossessing lands which OAI had approved for use by local aviation companies.”
OAI agrees, based on Clause three of the MoU, that Esso is authorized to commence construction of ESSO’s facilities without a sublease. In contrast, Guyanese applicants were made to wait several years for their subleases prior to moving a brick.
In fact, several small domestic aviation operators are still waiting for OAI to deal with their requests for land and other facilities at the airport.
Through the MoU, ESSO is not only protected from any breach of agreement by OAI, but will have the right to continue to possess the land if a breach occurs.
ESSO agreed to pay US$43,570 for years 2017-2020, and certain “small increases”.
The proposed lease payments are considered minuscule having regard for the estimated value of the land in the location itself which is valued at $500M. Real estate of this type on the neighbourhood would attract a minimum annual payment of $50M.
ESSO will pay OAI US$300,000 for completion of infrastructure, drainage, roads etc to be done by OAI to give ESSO access even though it is unclear how much all of this would actually cost and how much of it will come from OAI’s shareholders’ funds.
Whilst ESSO may terminate the agreement at any time, and for any reason, without any liability whatsoever, no such right is afforded to OAI as in such a case OAI accepts ESSO’s facilities “as is”.
Contrary to the conditions of the subleases to Guyanese companies at the airport, the MoU says that arbitration of dispute will be done through the rules of the international Chambers of Commerce and in Trinidad and Tobago. But, the agreement does not spell out who pays for any arbitration that may ensue.
The agreement on arbitration ties the hands and feet of the arbitrators by stating up front that “the parties waive any rights to recover punitive, indirect consequential and exemplary damages, and the arbitrators shall be so guided.”
The need for international arbitration for a dispute between the lessor and sub lessee involving 10 acres is unclear and could be very costly for OAI’s shareholders. However, this is quintessential ExxonMobil language and modus operandi.
The MoU makes no reference to Article 4.6 of the Master Lease which requires that subleases must contain a provision that the “covenants, promises, conditions and obligations” in the lease agreement shall bind ESSO and its heirs, etc.
Aviation advocate, Annette Arjoon-Martins has dealt with land issues at the airport since 2009. In an invited comment, Arjoon-Martins said that she is deeply concerned that OAI, a Guyanese company, would have double standards for local and international companies.
She views OAI’s behaviour as practising local content which is severely discriminatory to other Guyanese companies operating at the airport.
Arjoon-Martins said that she has been advised by some of the domestic operators that OAI has notified them that construction by ESSO will commence within two weeks.
The Ministry of Public Infrastructure is the focal Ministry in the Master Lease, with responsibility for the 450 acres of land at the Ogle airport. It seems to have had its authority removed.
Minister David Patterson, being aware of discriminatory land allocation and speculation by OAI, had made it clear to the Commissioner of Lands who had sought his advice on the extension of the Master Lease that this should not be extended. Ultimately, Minister Patterson had indicated that corrective actions should be taken to resolve the challenges at the airport.
This appears to no longer be the case as the speed at which ESSO has been facilitated by both OAI and the Government of Guyana is indicative that the oil and gas sector now has prominence over domestic aviation at an airport which was intended to have been developed with equity and fairness in a transparent and accountable manner.
Kaieteur News understands that the matter of the MoU is not mentioned in the annual report of the CEO of OAI to the board of directors and shareholders for year 2017.
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