Feb 16, 2022 News
…but makes no demand for full coverage insurance from Exxon and renegotiation of contract
“….we have to, at the level of the government, we have to try to keep the regime evolving and regulatory approvals at pace where we don’t become a humbug on the development of the industry and slow down the pace,” – Vice President Jagdeo
By Gary Eleazar
Kaieteur News – Guyana is looking for an accelerated exploration programme not just in the Stabroek Block with Esso Exploration and Production Limited (EEPGL)—ExxonMobil Guyana—as the operator but in the other oil blocks too.
This, as EEPGL parent company looks to invest more in Guyana with the right policy direction. These were among the assertions adumbrated yesterday at the opening of the International Energy Conference being held at the Marriot Hotel. Addressing the packed Marriott Ballroom gathering, Vice President Bharrat Jagdeo, dealt with Guyana’s oil and gas policy, noting that despite there are shortcomings in Guyana’s regime with regard its structures, frameworks and regulations in place for the industry, the developments in the industry must continue in an accelerated manner.
Jagdeo’s remarks came amid heightened calls for ExxonMobil to give this country’s full coverage insurance to protect it in the event of an oil spill. Also citizens have been demanding a renegotiation of the contract the Government of Guyana signed with ExxonMobil.
According to Jagdeo, “we have been trying to evolve the regime; because the pace of development has been rapid.” As such, the Vice President was adamant, “…we have to, at the level of the government, try to keep the regime evolving at a pace where we don’t become a humbug on the development of the industry and slow down the pace.”
Addressing the stakeholders, he conceded that Guyana has not, as yet, been able to evolve its policy, regulatory and other required structures in a mature manner. Conceding, “we are still lagging in that regard, Vice President Jagdeo noted that in evolving the new regime for operating in Guyana, the objective is to ensure that there is shared prosperity and that investors in “this high-risk sector” would also have an opportunity to get a return that mirrors the risk; that is important for us.”
It is in this vein the Vice President drew reference to a new fiscal regime to be introduced under the new Production Sharing Agreement to be developed which will ensure the industry evolves in a way to not remove incentives for fast-paced exploration or a decent return on capital.
This he said, would be achieved while at the same time ensuring that there is a greater portion of benefits coming to the people of the country. He said one of the guiding principles that would lead to the development of the new PSA is the preservation of a decent return for the investor that would allow them to raise the capital in order to press ahead with its exploration programmes.
As such the vice president in addressing the hundreds of delegates at the conference sought to assure that investors should not be “unduly alarmed that it (new PSA) will take away all the incentives.” According to Jagdeo, the evolution of the industry has to be done in a manner “where the prosperity has to be shared.”
Seeking to assure of predictability with regard investments in Guyana, Jagdeo reminded that the existing Petroleum Legislation in Guyana is dated 1986 and is “not fit for purpose.”
To this end he said, “we are aggressively working to resolve this.” Expounding further on the changes in the oil sector of the future, Jagdeo told stakeholders that Guyana, in building out an oil and gas policy in the net zero situation, will see an obligation to push companies that are investing to use new technology, lower emissions technology.” Failing this, could even see penalties. According to Jagdeo, any changes to the framework within which the industry is situated was not meant to shut down private foreign capital, “in fact it is badly required in the sector.”
According to Jagdeo, he is hopeful that by setting up an updated framework, locals can also benefit and that Guyana can avoid “what has been happening in many countries” where there are small pockets of enclave like prosperity but the masses, “not feeling it; we resolve to not have it in this country.” He used the opportunity to also remind that Guyana is at present welcoming foreign investors since there isn’t the capacity existing domestically.
Vice President Jagdeo used the occasion to remind that the projects that have been approved in the Stabroek Block alone, namely the Liza I, II Payara and imminently the Yellowtail Development represent some US$30B injected in the Stabroek Block.
To this end, he was adamant that this represents about ten times the total deposits in the domestic system, “just to give you an idea of the scale of resources, which cannot be found here.”
Maintaining Guyana’s commitment to a Net Zero Emissions by 2050 Jagdeo reminded that at that time there will still be demand for fossil fuel and said, “somebody has to supply the fuel to meet that demand.” Taking aim at the United Nations Secretary General, Antonio Gutterres, who had been widely reported on calling for no new investments in fossil fuels, a position that conflicts with the adumbrations of other world leaders.
To this end, Vice President Jagdeo said that for the UN and other developed countries to adopt such a position it would mean that “if we can’t develop it you are locking in the existing producers.” Such a position he said, is effectively arguing for a monopoly. To this end, he also lashed back at the assertion that investments in industry could actually result in stranded assets saying, that is the risk borne by investors and quipped, “what about unused potential.”
As such, the Vice President was unwavering in his government’s policy position, “in Guyana we support accelerated exploration; we support accelerated exploration and our incentive regime will reflect that.” He told those in attendance that in rearranging its existing regime they would see measures being implemented to encourage existing holders of licences in the oil blocks to move swiftly to exploration and expand the pace.
“We have been trying to evolve the regime,” Jagdeo said, and reminded of “the pace of development” in the industry which he described as rapid and, “we have to, at the level of the government, we have to try to keep the regime evolving and regulatory approvals at pace where we don’t become a humbug on the development of the industry and slow down the pace.”
Meanwhile, ExxonMobil Chairman and Chief Executive Officer (CEO) Darren Woods, in Guyana for the second time since taking that post, in his addressed to the packed gathering told those in attendance that his company has set aside some US$15B for investments this year in Guyana and this could be increased based on the policy initiatives of the government.
“With the support of government policy, we can invest more,” said Woods. Providing an update on the company’s operations in Guyana, the ExxonMobil official used the occasion to regale of the successes in the Stabroek Block and spoke to the 3,500 locals employed with the operation in addition to some 800 suppliers.
According to Woods, with regard that company’s operation in Guyana, it is “important that this progress continues” and disclosed that based on conversations with Head of State, President Irfaan Ali, and Vice President Jagdeo, “this is a very high priority for them.”
The ExxonMobil boss was adamant “people need access to energy including the energy resolution right here in Guyana; as people become more prosperous the need for energy will increase” and expressed the sentiment of a long future ahead in Guyana.
Jagdeo and Exxon playing cat and mouse games with our future.
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