Sep 07, 2018 News
By Abena Rockcliffe-Campbell
The President of Guyana has no authority under the Production Sharing Agreement (PSA) to dictate the pace at which ExxonMobil proceeds with developing oil fields within the Stabroek Block—one of the largest in the world.
This was confirmed by two Attorneys at Law and Oil and Gas Academics, Christopher Ram and Charles Ramson as well as former President Bharrat Jagdeo.
At his press conference last week, President David Granger had told journalists that the Government of Guyana will determine the pace at which oil fields in the Stabroek Block are developed.
“It is our sovereign right,” he had said.
However, others are saying that while this may indeed be Guyana’s sovereign right, that right was given away based on the provisions of the standing PSA that Guyana has with ExxonMobil.
“The President said it is not a matter for Exxon, this is a sovereign responsibility of the Government of Guyana, the Government of Guyana will determine the pace of oil field development,’ Jagdeo told reporters yesterday in recalling Granger’s remark.
“Did the President read the contract, he has no say in this, practically, and this is what he says?”
Also, Christopher Ram said that the contract does not allow Granger to determine the pace “and I have said that at least 10 times.”
Ram said that all the President has to do is “get a lawyer to read it (the contract) for him. The President cannot be that irrational.”
Ram stressed, “There is no restriction on the contractor as to their rate of exploration. He has given them a production license; does he realise that? Somebody should really talk to the President and save him the embarrassment of these statements he is making.”
The perspective of Charles Ramson, who, like Ram, is an attorney at law and is qualified in oil and gas management, is also that the President has no say. But Ramson said that the government can frustrate the process which will essentially cause a delay.
Ramson said that the parties of the 2016 PSA are bound to execute the terms and conditions of the said agreement.
“Therefore, Granger is wrong. Legally, he cannot determine the pace of development of ExxonMobil’s programme.” Ramson said that Granger would have been free to execute his “sovereign responsibility” if it was provided for under the contract.
However, Ramson said that while this is the case legally, “in reality, government can find ways of frustrating the process. Government can delay permits and licences. They can delay approvals for exemptions, waving of duties on importations or just not process them quickly enough.”
But, Ramson was keen to note that in the event that government takes this route, ExxonMobil can move to Arbitration which is provided for under Article 26 of the contract.
Even as Jagdeo noted yesterday that Granger was wrong to say that Guyana will determine the pace of development, he stressed his
overall disappointment with the press conference.
Jagdeo said that the wait for the President’s press conference has been so long that “everyone had high expectations that we would receive clarity on several issues. The country has been begging for guidance and leadership and direction for a very long time, and so who best to give the clarity about his government policy than the President, so we waited with bated breath.”
However, Jagdeo said that the President left the nation with even more questions.
“He (the President) said, ‘given the circumstances at the time I think the government did what was in the realm of possibilities. They did the best that could have been done.”
“This is sad, really, really sad. Who defined the realm of possibility for the President?”
Also, Jagdeo noted that in response to most questions on oil and gas, the President’s response was that ‘We have a new Energy Department,’ as though our future starts now in the oil and gas, not with the contract. He says too, ‘I am building capacity and I shall receive a full report on all of these matters in October.’”
Jagdeo posited that the fact that the President is now gearing to be updated on key matters in oil and gas begs the question, “What has he been doing for three and a half years?”
Jagdeo said that the existing contract between Guyana and ExxonMobil is far from the best that could have been done.
“This is not the best we could have gotten and this is a low bar the President sets.”
Jagdeo lamented, “We had all these big finds and now the President will be updated.”
The Opposition leader continued, “The whole country thought the President would bring clarity, he is the one the chief policy maker elected to chair Cabinet. But, he has put them in an even worst position with the explanations. The President is out at sea, somewhere lost in the stratosphere. He was asked what percentage of the Stabroek Block has been explored and he said, ‘I will ask for a through briefing in October.”
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