Norton slams Exxon deal in interview with UK media

Aug 12, 2024 News

– but afraid to commit to renegotiating lopsided contract  

Kaieteur News – Opposition Leader, Aubrey Norton while still afraid to commit to renegotiating the lopsided 2016 Production Sharing Agreement, signed by the Coalition government with Exxon, recently criticised the deal in an interview with The Guardian, a UK-based media house.

Opposition Leader, Aubrey Norton

In its article published last month under the headline ‘Guyana banks on future as a ‘new Qatar’ in high-stakes gamble over oil production’ The Guardian said the Leader of the Opposition criticised the low royalties being paid to Guyana as per the terms of the agreement the country signed with American oil giant, Exxon Mobil and partners, Hess Guyana Exploration Ltd. and CNOOC Petroleum Guyana Limited.

That contract, often described as the worst oil deal in the world, positions Guyana to receive a meagre 2% royalty and 12.5% of profits generated. Each month, Exxon and its Co-Venturers take 75% of the oil to repay its investments across the oil rich Stabroek Block. The remaining portion, 25% is split with Guyana as profits.

According to the report by The Guardian, the leader of the opposition, criticises the royalties and terms of the contract signed with ExxonMobil and the policy of distributing the benefits of oil, but does not question the exploitation. He said, “Oil allows us the resources to develop the country. The downside is that you have a government that isn’t focused on the development of the people of Guyana.”

Norton, who leads the largest Opposition party in the Guyana, the People’s National Congress Reform (PNC/R) has been afraid to commit to renegotiating the lopsided Exxon deal should he be elected to govern the country. In April 2022 Norton issued a statement following an article published by Kaieteur News under the headline “Norton backs calls for renegotiation of oil contract”. He said, “Nowhere in the interview did I say that. What I did say was, that the law provides for action to be taken to ensure that the people of Guyana benefit from our resources, and that the contract provides for changes to be made in keeping with Article 31.2 of the Agreement and that the PNCR will do everything within the confines of the law to ensure our people get increased benefits from the oil and gas sector.”

The Leader of the Opposition in the initial article spoke at length about Guyana’s changed circumstances, compared to when the deal was first signed, in justifying the need for changes to the contract.

He explained that when Guyana drew up its first oil related contract, there were a lot of high risks associated with the initial projects. He said that as he understands it, the tendency of negotiations at the time, was to cater for those high risks because of the uncertainty that surrounded the presence and value of the resource.
“Now that the evidence is there, that we have the oil resources, I believe it is a new context and we must engage Exxon (Mobil) noting the new context,” Norton highlighted at the time.  More recently, the PNCR has committed to engaging Exxon during its first 50 days in office for better terms should it be elected, though the Opposition Leader is still afraid to use the word “renegotiation”.

A renegotiation simply means entering into discussions to effect changes to an initial agreement. Stakeholders have called on Guyana to re-engage Exxon and its partners to secure a better deal for its people, while the leaders continue to refuse. Only in February this year, Trinidad and Tobago’s Minister of Energy and Energy Industries, Stuart Young told the Guyana Energy Conference that he stands ready to help Guyana renegotiate the lopsided ExxonMobil contract to ensure all Guyanese benefit.

The conference hall was in silence as Young’s remarks echoed through the Guyana Marriott Conference room. Young explained, “We in Trinidad and Tobago have spent the last seven years, after dealing with decades of contracts, renegotiating almost all of our contracts in the gas industry.”

He also pointed out that the twin island in December last year achieved another significant milestone by becoming the first country in the world to restructure its Liquefied Natural Gas (LNG) facilities, following five years of discussions across the table with BP and Shell. To this end, Young said, “It can be done, so our ability to sit down right across the aisle and to share with those who are now entering into the negotiations of their PSCs (Production Sharing Contracts), their E&P (Exploration and Production) Licenses etcetera should not be underestimated because we have done the same thing in our gas supply contracts for the upstream.” The minister was keen to note that investors have not left the country because of T&T’s effort to secure better terms for its people.

• afraid, Conference, Norton, renegotiation, Stuart Young, The Guardian