Aug 18, 2022 News
Kaieteur News – Vice President (VP) Bharrat Jagdeo and his boss, President Irfaan Ali are at odds over the issue of renegotiation of the lopsided ExxonMobil contract, with the VP on record acknowledging that the “bad” oil contract will change in the future, but the Guyanese leader saying, there will be no change to the deal.
On the sidelines of an event on Wednesday, Ali was asked by this publication whether a renegotiation of the deal is presently on the table when he insisted that there will be no such thing. In fact, he went on to say that he does not believe the VP was quoted correctly. According to the Head of State, “I don’t think you are quoting the Vice President correctly because the Vice President would have said that future (Production Sharing Agreements) PSAs would be different from this.” The President therefore noted that this is “completely different” from saying the current agreement would be changed.
To this end, he said, “The government’s position, which I have heard the VP spoken about many times and the minister, is that future PSAs would be far different from this one.”
However, on August 6, during an outreach hosted at Patentia, West Bank Demerara (WBD), Jagdeo who has oversight of the oil and gas sector while addressing hundreds of residents specifically stated: “on the one hand, you see Rystad Energy and Exxon trying to prove that they are the best thing for Guyana, which is not so. The contract was bad, we have to change it in the future but we are not going to renegotiate now.”
Nonetheless, Jagdeo pointed out that when he notices the “extremism” in the daily newspapers “swinging from one end to the other in terms of policy making, it is obvious that the administration simply cannot succumb to such strategies, especially since the “big goal is long term development, however hard it is.”
He went on to explain that while Kaieteur News and “a few others” believe that the contract is the worst in the world, this too is simply not true. Jagdeo did not bother to tell the gathering which other contract exists that only benefits oil companies, rather than countries, but noted that his administration stands in the middle where the deal is concerned.
“We stand in the middle and we are not going to be populists in orientation because government’s side that are populists in orientation and say things that people only want to hear, they can never craft a sustainable policy for the country,” the former Head of State noted, before switching gears to discuss part-time job opportunities for the people on the WBD.
See link below from 11 minutes:
Following the VPs remarks regarding renegotiation of the oil contract, President of ExxonMobil Guyana, Alistair Routledge embarked on a public relations campaign to sell the oil deal as being good for Guyana. In an interview with Newsroom, an online media entity closely affiliated with the government, Routledge sought to assure citizens that its operations in Guyana are safe and of benefit to the entire population. That interview premiered on August 12, less than a week after the VP spoke of renegotiating the deal.
Routledge even turned to Mikhail Rodrigues, popularly known as the Guyanese Critic on Saturday for exclusive discussion where he again defended the oil contract. Routledge in responding to the question of considering a renegotiation of the oil contract said, “The business we are in is we don’t know what’s coming or what’s in the corner. It may look great today but I would say we kind of made it look easy so far. A lot of the resource that we found is going to be more difficult to develop. The return on those won’t be as good as the Liza Field. The first Field that we found was the best resource that we found in the Stabroek Block. That was where we started.”
He went on to explain that so far, the reservoirs have not been as lucrative. At the same time, the high price of oil on the global market “will almost certainly fall” which means that the business must be “robust and durable” for all stakeholders to allow them to continue investing in the production of Guyana’s oil and gas resources.
The 2016 PSA
Activists in Guyana have been lobbying for changes to be made to the 2016 PSA as Guyana receives a mere two percent royalty for its sweet light crude and settled for 50 percent profit sharing, after Exxon takes 75 percent of the earnings to clear its expenses.
The deal that the oil company often brags about to its shareholders, also forces Guyanese to pay their share of taxes, amounting to millions of US dollars each year. This figure is likely to further balloon as more operations come on stream. In addition, the country is allowing ExxonMobil to operate offshore without full liability coverage in the event of an oil spill, which means that the risk is borne by Guyana. Another key provision that is lacking in the document is ring-fencing provision, which would avoid the oil company from using the petroleum revenue in one field to cover for expenses in another.
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