Latest update April 24th, 2024 12:59 AM
Oct 12, 2022 News
…as Stabroek Block oil reserves climbs by 10 billion barrels
Kaieteur News – “The contract provides a mechanism to engage Exxon to make whatever changes are needed. If you are interested in calling it renegotiation, feel free. What I am saying to you is that there is a mechanism to make changes and Government should utilise it.”
This was the Leader of the Opposition, Aubrey Norton’s response on Tuesday when he was asked to weigh in on the calls for renegotiation owing to the major developments in the Stabroek Block, subsequent to the Production Sharing Agreement (PSA) being signed in 2016.
When the deal with ExxonMobil was inked by the former Coalition Government, a mere one billion barrels of oil had been discovered in the Stabroek Block and whereas six years later, 10 billion more barrels have been found.
Although Norton had previously made it clear that he supports the “sanctity of contract” principle, during his weekly Press Conference on Tuesday, he told this newspaper that the deal can be changed.
While the Leader explained that future PSAs must rake in additional value for the country, he noted, “I have pointed out more than once that there is a clause in the agreement that allows the two parties – the Government and Exxon – to meet and negotiate and make changes as is necessary. I believe if the Government was competent they would have begun ‘backdoor discussions’ because a lot of those discussions in the early phase, you will have to do them quietly. You will have to open discussions on this contract with the aim of engaging Exxon in keeping with the law to make the changes that are needed to ensure the people of Guyana benefits.”
Moreover, Norton reasoned that in securing more wealth for the country, key provisions must also be put in place to avoid corruption, where only a section of the society enjoys the revenue from the oil and gas sector.
According to the Opposition Leader, “You can make changes and only the PPP elite friends and family benefit as is happening now. We also need to take it to another level that when we make the changes, mechanisms are put in place for other persons outside of that elite to benefit.” He continued, “One of the dangers we face is that as presently structured, we could increase the wealth to a small amount of people and increase the poverty to the majority of people so in addressing this issue we also need to address the distribution of income so that the people of this country can benefit and all of those the APNU+AFC is in favour of.”
The Opposition Leader in further arguing his point said that Guyana can learn from the lessons of other oil producing nations where it is evident that while those countries own massive oil reserves, the people continue to punish. As such, he insisted, “What we need to do is to put mechanisms in place to ensure our people benefit and they do not punish and therefore it is not solely about renegotiating, it is also about redistributing when you get the resources.”
While the Opposition now believes that changes to the lopsided 2016 PSA are possible, the PPP Government is adamant that the “sanctity of contract” principle must be maintained.
Recently, International Lawyer, Melinda Janki weighed in on Government’s position on the deal, explaining that this ‘sanctity of contract’ term does not mean that a renegotiation is impossible. Janki was a Presenter on a Globespan 24×7 discussion where she pointed out “when we hear people yapping about ‘sanctity of contracts’ and that is the reason for not changing the contract that is of course complete nonsense. Sanctity of contract does not mean that the contract cannot be changed by the parties to the contract. Sanctity of contract means that one party cannot unilaterally suddenly decide that he or she, or it doesn’t like these terms so they are not gonna do it. It’s two different things…”
The Lawyer noted that the 2016 PSA, specifically at Article 31.2 states, “This agreement shall not be amended or modified in any respect except by written agreement entered into by all the parties which shall state the date upon which the amendment or modification shall become effective.” As such, Janki told viewers of the online programme that the deal most definitely can be changed.
A New York based Lawyer, Dr. Vivian Williams has also challenged this standing by the Government, as he believes there are clear grounds for which that principle can be set aside or overruled.
In an invited comment, Dr. Williams said successive administrations have, for too long, invoked the common law ‘doctrine of sanctity of contract’ to evade calls for renegotiation of the Stabroek Block PSA.
He said, “What is playing out is the misapplication of a legal doctrine to avoid acting in the nation’s best interest. Because the ‘sanctity of contract’ doctrine does not apply to the consensual process of contract renegotiation, common sense should have shut down that argument before it was even made.”
Guyana’s third major political force, the Alliance For Change (AFC) party has already signalled its willingness to support the incumbent administration in renegotiating the lopsided deal.
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