Kaieteur News – The government blows hot and blows cold. It promises the Guyanese people that future oil agreements will be subject to different and better terms than what presently exist. But privately when it meets with the oil barons, it cuddles up to them and promises expeditious approval of future field development plans.
This newspaper has reported a top oil official as saying that following a meeting with government he is of the understanding that the PPP/C Government is desirous of expediting the approval process for the Yellowtail Project, the fourth to be developed in the Stabroek Block. This newspaper also quoted Vice President Jagdeo as confirming.
The oil official’s understanding of the perspectives exchanged and the Government’s position on the matter was accurate while adding that before year-end provides ample time for all issues with the project to be addressed.
This is bad news for the people of Guyana. The approval for Yellowtail provides yet another opportunity for the government to claw back greater benefits for Guyana. But ‘clawing back’ should become a euphemism for renegotiation.
The government’s excuse has always been that it has to respect the sanctity of contracts. But this is foolishness, implying that new terms can only be agreed to in future contracts.
The Production Sharing Agreement between the Government of Guyana and ExxonMobil, Hess and CNOOC provides for renegotiation. Renegotiation by definition is not imposition or nationalisation; it has to involve the oil companies.
The Stability Clause of the Agreement makes accommodation for the renegotiation, requiring only that it enjoy the consent of the oil companies. Article 32.1 provides for renegotiation but insists that this requires, as expected, the consent of ExxonMobil and company.
Jagdeo therefore has no excuse for not renegotiating the contract. It would not be breach of the sanctity of the contract if there were to be renegotiation since the contract makes provision for this possibility. But the weak-kneed government simply lacks what it takes or is unwilling to bring Exxon and company to the negotiation table, despite the numerous opportunities it had to do so.
The Coalition negotiated the present Production Sharing Agreement (PSA) after Exxon came to it seeking a production licence, following the discovery of oil in commercial quantities. This PSA is the greatest act of betrayal known in the history of the country.
The PPP/C protested the agreement and said it would renegotiate it. The party went as far as saying in 2018 that it would support a motion in the National Assembly to renegotiate the oil contract.
Then it began to change its tunes. It turned around and said that it will respect the sanctity of contracts but future agreements will be different. But what future agreements? Exxon will use this very agreement and through the buy-ins for other blocks enjoy the rights to those blocks under the present agreement. And the present contract will serve as a precedent for future production sharing agreements.
The PPP/C squandered a golden opportunity to right the wrongs in the present agreement. Exxon came to it for approval for the Payara Field Development Plan. Nothing much changed.
Against this background, Yellowtail – or Exxon’s fourth field development plan for the Stabroek Block – must not be allowed to become a cut-tail for Guyana. Here again the PPP/C is presented with an opportunity to put things right.
But it has no intention of doing so unless it is forced to do so by the Guyanese people. It is therefore time for the Guyanese people to issue an ultimatum to the PPP/C to renegotiate.
The PPP/C is prepared to once again grovel at the feet of ExxonMobil. It has already given assurances that it has between now and December to approve the Yellowtail field Development Plan. If, as expected, it does so, then all Guyana can kiss their future goodbye.
Renegotiation is recognised in contract law, especially where one party is extremely disadvantaged. No one needs a microscope or crystal ball to appreciate the compelling grounds, which presently exist for the renegotiation of the contract. The PSA is so one-sided that it triggers its own grounds for renegotiation.
Renegotiation is possible and is now absolutely essential. Without renegotiation, our children and grandchildren will remain poor forever. It is time for Guyanese to begin wearing T-shirts calling for a better deal, now.
(The views expressed in this article are those of the author and do not necessarily reflect the opinions of this newspaper.)
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