Trinidad and Tobago Energy Minister, Franklin Khan on Wednesday announced a license extension agreement between the Government and several oil and gas companies for four production licenses that the companies have ventures in.
This represents just one of a series of actions taken by the twin-island nation to secure more value for its people, as its negotiations over the years have ensured an increasing share of the revenue from the exploitation of its petroleum resource for the people of T&T.
Meanwhile, Guyana refuses to challenge oil major ExxonMobil to secure more value for the people, leaving the country stuck with a lopsided deal constituted by provisions embedded over 20 years ago.
Though the deal was renewed in 2016, improvements were negligible.
The T&T’s Energy Minister stated that the agreement is the outcome of continuing negotiations on gas related issues, noting that the first phase completed late 2018 resulted in a 10-year extension of one of BP’s TT’s licenses with a benefit to the state of 1.0B for settlement of legacy issues.
Khan’s ministry noted that under this new agreement, the four licenses- Teak, Samaan, Poui and East Mayaro, have been extended each for a period of 10 years; and that further discussions are scheduled between the parties “to bring the licences up to date with the modern exploration and production licences”.
The Ministry expects the state to benefit from incremental value of about US$250M by 2024 under the agreements. The talks are conducted by the Government’s ‘Empowered Negotiating Team’ led by Khan himself. Included are Minister of National Security, Stuart Young; a technical team from the Energy Ministry, US attorneys, and representatives of Poten & Partners UK Ltd as technical advisors.
The T&T Government said that the action it has taken has been mutually beneficial to itself and the upstream producers.
“Government policies have also enabled the country to derive a greater share of revenue from the monetization of the country’s hydrocarbon resources. These outcomes are testimony to the effectiveness of the Government’s energy policies and the positive collaboration with upstream stakeholders,” the Energy Ministry stated.
T&T Prime Minister, Keith Rowley, has stewarded negotiations with petroleum companies for years and has insisted that if situations change, agreements must adjust to reflect those changes. He had visited Guyana in 2018, and gave Guyana advice on the prospect of renegotiation. T&T has since then, renegotiated several deals to get more for the people.
He had said that it was necessary to build a platform of mutual respect “and an ability to sit in the same room as equals with these sophisticated multinational companies”.
Guyana’s government has run from talk of renegotiation of the controversial Stabroek Block deal, despite local and international commentators, as well as local newspapers noting many provisions in the contract, which are lopsided and unfair.
Global Witness, a watchdog body, found that the deal is so unfair that Guyana will lose about US$55B over its lifetime, compared to a fair deal.
At the current juncture, ExxonMobil is financially weakened, and experts have advised that the best time to seek renegotiation is now, as the company needs Guyana more than Guyana needs it.
Both the APNU+AFC and PPP/C Governments have insisted that contract sanctity should be respected.
Rowley had noted, however, that though contract sanctity must be respected, contracts are not set in stone. He has told oil companies that the government has a role in ensuring that the people get “more than crumbs that fall off the table.”
This has been the guiding philosophy of the T&T government’s management of the sector.
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