Latest update April 19th, 2024 12:59 AM
Nov 20, 2022 News
… calls on Guyanese to be vigilant
Kaieteur News – ExxonMobil will not leave Guyana’s shores if the Government of Guyana were to change the Production Sharing Agreement (PSA) for the Stabroek Block. This is the view expressed by Leader of the Alliance For Change, Khemraj Ramjattan.
“ExxonMobil will never leave Guyana anymore. You can argue that you need a better deal and they will give you a better deal,” he said.
Ramjattan is adamant that “No investor would want to leave Guyana when over 11 billion barrels of oil have been found”. He said that Guyanese ought not to accept the suggestion by the People’s Progressive Party (PPP) Administration that a change to the Stabroek Block PSA would drive investors away.
During the AFC’s press conference on Friday, Ramjattan said Minister of Natural Resources Vickram Bharrat “is obviously trying to justify the lie that they did during the campaign period. All of them had indicated that it was a rotten deal we signed on to and that they will renegotiate to get a better deal and now they are talking about sanctity of contracts and all of that.”
The AFC leader said his party believes that due to the changed circumstances in the prolific Stabroek Block, which ExxonMobil holds, there is need for the country to secure better terms. This, he said, will not chase investors.
“America right now is asking because of the surplus. Biden is trying to get as much more taxes and so on from the oil companies, including Exxon and all those shale companies,” Ramjattan said.
To this end, Ramjattan said other governments can take similar steps, especially one that was elected on a promise to “renegotiate”.
“People must not fall for it, but there are so many gullible Guyanese who simply now accept that it would affect foreign direct investment. It is not going to be. Genuine foreign direct investment will come to Guyana wanting to meet an honest, truthful government and if you are going to say one day, you are going to renegotiate and the next day, you are not going to renegotiate that is not going to be appealing to foreign investors,” Ramjattan said.
The AFC believes that the PPP does not want to change the Exxon deal to maintain a good relationship with the oil giant. Careful not to disclose what he meant, Ramjattan urged that Guyanese be vigilant as oil companies may be supportive of the Government in the lead up to elections.
“They have started it already and then you are gonna see them releasing monies for certain community projects in and around strongholds,” the former Minister under the A Partnership for National Unity (APNU) and Alliance For Change (AFC) Coalition government said.
On Thursday, Minister Bharrat told a Local Content Forum that if government interferes with the two percent royalty or any other fiscal provision in the lopsided PSA signed with ExxonMobil and its partners, it could not only risk chasing away investors but even hurt the country’s reputation as a safe haven for companies’ investments.
Bharrat said over the years, the company would have faced criticisms for the PSA signed in 2016.
“But we have made a commitment and our position is clear that we will not renegotiate this contract because we want Guyana to be seen as a stable country where investments are secured and there is predictability in companies investing in our country; otherwise, we would be doing an injustice to our country,” the minister stated.
Kaieteur News has repeatedly reported that the Stabroek Block PSA is one of the world’s worst agreements when compared to 130 other deals globally. For example, the PSA sees the government paying the contractor’s income tax out of the country’s share of the profits. However, none of the 130 PSAs examined shows this arrangement.
Further, the PSA is the only one out of 130, which has very moderate work obligations for contractors who are vested with offshore licences.
Additionally, the Guyana-ExxonMobil PSA is the only one out of 130 contracts, which has no ring-fencing provisions to prevent costs of unsuccessful wells being carried over to that of successful wells. There is also no sliding scale for royalty to increase as production improves.
Further, Guyana’s PSA is the only one out of 130 in the world that allows insurance premiums to be fully recovered as well as interest on loans and financing costs that are incurred by the contractors.
Please share this to every Guyanese including your house cats.
Apr 19, 2024
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