Latest update April 19th, 2024 12:59 AM
Jan 27, 2019 News
By Kiana Wilburg
In spite of the advice being offered by institutions such as the World Bank and the International Monetary Fund (IMF), former Petroleum Advisor to Government, Dr. Jan Mangal, strongly contends that Guyana should not be distracted with drafting a new model Production Sharing Agreement (PSA).
In his view, this move makes no sense since there are hardly any blocks left to give out.
He argues instead, that the authorities of the day should refocus their energies in the direction of fixing existing agreements so that Guyana can get more value for its resources.
Dr. Mangal said, “All of this talk about new PSAs is really a red herring because there are hardly any blocks left. The only major block out there of interest is Block C, and that is extremely deep water. The previous government awarded the Canje and the Kaieteur Blocks already, as well as others.
“So this talk of ‘Oh well we kind of missed the boat with the Stabroek Block but in the future we will do the PSA so we can get it right with the remaining blocks and do better,’ is really just a red herring.”
The Oil and Gas Consultant continued, “This is because all the oil and value for Guyana might end up being in the Stabroek Block or the adjacent blocks already awarded with unfair awful terms.
“So when the government, US state and international bodies like the IMF says let’s focus on getting better agreements in the future, it just does not make sense for Guyana.”
The former Government Advisor added, “Let’s not waste too much time being distracted with a new model PSA for future agreements (since this is an easy task and not a priority), but instead, let us focus on the existing agreements and revisit those so we can get more value out of those.”
Dr. Mangal noted however that the government, current and past, seems scared to do this. He said that policymakers continually raise the issue of sanctity of contracts but in the extractive sector, these contracts are always revisited so there is no sanctity of contracts.
THE BIGGEST BANG
Energy Department Head, Dr. Mark Bynoe, had told Kaieteur News that his office will be revising Guyana’s model Production Sharing Agreement to ensure the country gets the “biggest bang for its buck.”
Dr. Bynoe had said, “We currently have a PSA and it is what we used in the case of Exxon. We want to ensure we review that in its entirety because there will be things that will need tweaking and that goes without saying. The idea is to have a model PSA which is more contextual to our current reality and where we are going.”
The official added, “That model PSA, once it is in place would be looked at by the Department (continuously) and it will be applied and tweaked where necessary.”
Dr. Bynoe had also sought to stress that the PSA would not be a one-size-fits-all approach. He said that there would be times when it will need to be amended depending on the context of the situation that obtains.
“What I am saying is that it will depend on the context of the situation.”
Dr. Bynoe had added, “What we are interested in ensuring is that Guyana gets maximum returns on its resources and that those resources or the benefits derived there from would redound to Guyana. The entire focus is to ensure we are getting the biggest bang for the buck.”
JORDAN AGREES
Finance Minister, Winston Jordan is also of the view that the existing template for Production Sharing Agreements must be revised. He made this position quite clear during his reading of budget 2018.
The Finance Minister had said that the discoveries by ExxonMobil have de-risked the basin and has resulted in the significant ramping up of exploration activities in other already-allocated off-shore blocs.
In light of the discoveries, the economist said that the Government also anticipates significant interest in exploring the unallocated blocs of Guyana’s de-risked, off-shore basins. As such, the Finance Minister said it is imperative that the Government safeguard the rights of the nation to a fair share of resource wealth.
Where is the BETTER MANAGEMENT/RENEGOTIATION OF THE OIL CONTRACTS you promised Jagdeo?
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