May 22, 2023 News
…as Exxon says it will not walk away easily if contract changes
Kaieteur News – Transparency advocate and activist for a better oil contract, Yog Mahadeo believes it is high time Guyanese wake up to their powers, and leverage same to get more out of the bountiful natural resources discovered offshore.
His comments come on the heels of a revelation by President of ExxonMobil Guyana, Alistair Routledge, that the oil giant would not turn its back on the nation should government demand more from the oil discovered in the Stabroek Block.
This has been a frequent excuse used by the government of Guyana to avoid renegotiating the lopsided contract.
Mahadeo however pointed out, “The fact is that Exxon will never walk away from Guyana. Everyone knows that, even the governing cheerleaders of Exxon. We must be the only country on earth that allows Exxon to be superior to our constitution and our National Assembly and refuse to do anything about it!”
He continued to explain, “We know that Guyana is their cash haven! That is the reality. We represent cash flows that Exxon will never walk away from. The Government knows full well what it is doing to aid and abet the oil steal. We, the people, have to now take matters in our own hands and stop the steal.”
The activist pointed out that in April this year, the European Union changed its tax rules for Exxon, demanding more taxes, whereas the Guyana Government is finding more ways to give the nation’s wealth to Exxon.
To this end, he urged, “As Guyanese we must realise that we hold the real power, not Exxon, not the Government in cahoots with the opposition. It is us as Guyanese that must stop the steal. Let us realise our value to Exxon and know that between now and 2050, we are very important to Exxon. So let us leverage this to get more for our future generations in whose faces there will be zero oil!”
On Friday, Routledge during a media engagement at the company’s Kingston, Georgetown office was asked by Kaieteur News if it is willing to return to the table to discuss additional fiscal benefits for Guyana, in light of increased calls and the continued exploration success.
According to him, “This agreement was competitive at the time that we signed it and we still believe it to be the case, and we have made investment on the basis of the contract as it stands. That continued question really misses the point which is: How does the country maximize the value from the contracts that it has and from future contracts.”
Routledge also boasted that this is the “most valuable contract the country has”, therefore, the country ought to focus on how to make it work. In fact, he explained, “The moment we try to change the contract, the investment will stop, the local content development will stop.”
Kaieteur News immediately sought clarity from Routledge on whether he believes ExxonMobil Corporation would walk away if the administration asks for a 10 percent royalty for instance.
To this end, he explained, “History will tell you that when disputes start about contracts, investments stop, investors hate uncertainty.” He was however told that the question was directly about Exxon and if it is prepared to pack up and leave Guyana over such a dispute, especially since it has already made over 30 discoveries since 2015.
In response, Routledge explained, “No company walks away easily. I have lived through Venezuela in 2004, 5, 6, 7 when the government imposed a new contract on our operations and we worked extremely hard to avoid that but the government created an environment where we couldn’t stay and it ended up in international arbitration and in the meantime, no further investment, you can see what happened to the country, it has a huge endowment of resources, but sadly has lacked investment for many years and has moved from a production of 3 million barrels to less than 600,000 barrels of oil per day.”
Last year during a Local Content Forum, Minister of Natural Resources, Vickram Bharrat noted that if the government interferes with the two percent royalty or any other fiscal provision in the 2016 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.
He also pointed out, “This is not about the PPP or the Coalition, this is about our country. Because if we do that, believe me, investors will no longer line up in Guyana because there would be this fear that every time the government changes, there would be renegotiation of contracts. We don’t want Guyana to be seen as that, this is about how people look at us as a people.”
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