Don’t be fearful of renegotiation...Exxon will not walk away from Guyana, no matter what –says Houston University Instructor

Don’t be fearful of renegotiation…Exxon will not walk away from Guyana, no matter what –says Houston University Instructor

May 19, 2019 News

By Kiana Wilburg

The APNU+AFC Administration has taken the position that renegotiation of the highly criticized Production Sharing Agreement (PS

Co-Director, Instructor at Houston University, Tom Mitro

A) with ExxonMobil’s subsidiary, Esso Exploration and Production Guyana Limited (EEPGL), Hess Corporation and CNOOC/NEXEN, would send the wrong impression to investors.
Like Exxon, it stressed that there must be respect for the sanctity of contracts.
But Tom Mitro, Instructor and the Co-Director at the University of Houston, told Kaieteur News in unambiguous terms, that the renegotiation of contracts is quite normal in the petroleum industry.
And when it comes to the uneasiness over contract renegotiation in Guyana, the Instructor categorically stated that ExxonMobil and its partners would not walk away from Guyana because the people want better terms.
The Senior Fellow with the Columbia Center on Sustainable Investment (CCSI) said, “You can safely say, and write this down, ‘Exxon will not walk away from Guyana, no matter what. They have no other opportunity like this in the world…”
The Consultant who has 45 years of experience in management and instruction of petroleum financial, commercial and government related activities said that even if ExxonMobil walked, which is highly unlikely, there are many other reputable companies that would willingly come into the sector.
Mitro who previously worked for 32 years for Gulf Oil and Chevron said, “The best way for Government to do it (renegotiation) is to say ‘Let’s try to find a way forward that works for all of us’ because ExxonMobil is facing criticisms on this deal from different observers and the government too…”
Mitro who teaches contract negotiation and studies the personalities of oil conglomerates said that criticisms of the current PSA poses risks for both the State and ExxonMobil. He said that ExxonMobil could face the risk of being excluded by some countries, for example, because they are not dealing fairly.
The University Professor said, “Even the government can be at risk, because who knows…it may cause them to lose elections or cause unrest…”
Furthermore, the Senior Fellow with the Columbia Center on Sustainable Investment said that this project under current terms and relatively low oil prices will bring great returns for ExxonMobil. As such, Mitro said that Guyana can adjust and tweak terms in the contract so that it works for both parties.
He said that trying to force a deal that does not work for both parties has implications.