Latest update April 25th, 2024 12:35 AM
Apr 10, 2019 News
The US government will play no role in any possible renegotiation of the oil deal with ExxonMobil.
That company, a US-controlled oil giant, is one of the biggest in the world. It is locked in a deal with Guyana for two percent royalty on every barrel it declares plus a 50/50 split in profits.
However, since the details of the arrangements have come out, following the oil discovery in 2015, and subsequent confirmation of several wells of over five billion barrels of oil, there has been widespread criticisms and expressions of concern.
For one, several critics believe that the royalty is too low.
The oil discovered is the lighter, sweet crude, which fetches premium price on the world market. Guyana, it is being argued, should have settled for a better deal of at least 10 percent.
In addition, the 50/50 share in the profits is being viewed with deep suspicion.
ExxonMobil’s long history in the oil business has not been without controversy.
That 50/50 split of profits would only come after ExxonMobil and its two other partners have taken their expenses out. Those expenses include pre-2015 spending incurred during the initial exploration phase.
ExxonMobil itself has had a history of not playing fair, and with evidence of expenses being inflated in other countries, thus reducing profits, it has been stressed that the shiny glitter of the black gold would not be so shiny, unless Guyana hurriedly attempts to renegotiate the deal.
On Monday, newly-accredited US ambassador, Sarah-Ann Lynch made it clear that the ball is in Guyana’s court. She was speaking during a media engagement at the Embassy in Kingston.
Lynch emphasised that there would be no interference from the local US embassy to facilitate a renegotiation. She said that the embassy’s main role would be to foster opportunities in the oil and gas industry; it’s coming online and its growth.
Lynch also said that the focus is on a level playing field, with an ample opportunity for growth and continuous interaction with government.
Asked whether the US believes that Guyana, as a sovereign country, has the right to push for a negotiation, Lynch stressed that indeed there is certainly the recognition of the country’s sovereignty. However, she pointed out, it would be up to the government to work it out with the private sector to see if there is room for negotiation.
The US ambassador took up her recent posting a month ago.
Batting for the oil find, she said that she believes that there is tremendous opportunity for the country, given the gas reserves.
“The spinoffs will not only benefit the oil and gas sector, but also impact positively all the secondary, tertiary sectors and companies involved in manufacturing, tourism, agriculture, information and technology and services areas. I think there are tremendous opportunities,” she posited.
Jagdeo giving Exxon 102 cent to collect 2 cent.
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