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All Guyana's oil contracts bear similar ugly features as one with Exxon – Govt. promises to do different “going forward”

 

 

 

By Abena Rockcliffe-Campbell

GEORGETOWN
Petroleumworld 02 23 2018

The Production Sharing Agreement (PSA) that the Government of Guyana signed with ExxonMobil is definitely not the only one of its kind in Guyana. Kaieteur News has been told that all of the oil contracts which have been signed by APNU+AFC government as well as the PPP/C government are similar.

In fact, this newspaper understands that the model that was being used over the years dates back to the 1970s. Guyana has just about 10 existing contracts with various oil companies including ExxonMobil. These have all been modeled from a contract that the country had with Mobil, a company that had a presence in Guyana during the time of former President, the late Linden Forbes Sampson Burnham.

It was that same template that was reportedly used to formulate the ExxonMobil 1999 PSA.

However, when ExxonMobil announced that it found oil in commercial quantities offshore Guyana in 2015, and the APNU+AFC government took another look at the contract, a decision was taken by government to review and renegotiate the contract. In fact, this newspaper carried an article back in 2016 that quoted Trotman, expressing government's desire to do same.

That article can be read here: https://www.kaieteurnewsonline.com/2016/06/29/govt-reviews-17-year-old-contract-with-exxon-mobil-but-agrees-it-provides-relative-protection-as-constituted-2 /.

However, Kaieteur News has been told that ExxonMobil, knowing the advantageous provisions of the 1999 contract, took a firm stance that it was not willing to renegotiate the contract. Apparently, the company had grounds for that position. And government “respects the sanctity of agreements.”

Nevertheless, the government maneuvered a one percent increase in royalty, which in ExxonMobil's view, was negligible; it does not hurt the company in anyway. But, that meagre increase and the inclusion of a signature bonus, which is also negligible in the grand scheme of things, were predicated on an agreement to extend the life of the contract beyond 2018. ExxonMobil's contract would have ended in June and another would have had to be negotiated. The government opted to extend.

With the extension, ExxonMobil managed to slip in a few more “oppressive” provisions as those contained in the Stability Clause.

MOVING FORWARD

No one from the Government has publicly admitted that the ExxonMobil contract is oppressive. In fact, senior government officials have been in high praise of the company and the contract.

Minister of Natural Resources, Raphael Trotman, was the one who signed the ExxonMobil contract on government's behalf. He said that Guyana has been able to get a good deal.

Minister of State, Joseph Harmon; Minister of Finance, Winston Jordan; Minister of Public Infrastructure, David Patterson and Minister of Foreign Affairs, Carl Greenidge have all said that the contract is a good one – especially Greenidge.

However, despite the songs of praise that have been sung, government has identified that better needs to be done.

Yesterday, Harmon said that the government, in going forward, will be looking to secure contracts that are not so similar to those already signed.

“Going forward, we are basically looking at all these things in these additional contracts. We recognized, and the world has seen it, that there is a striking similarity between the contract signed with CGX and the ExxonMobil contract.  These are contracts negotiated and signed by the previous administration. I am not going there as to who signed what. We have to deal with what is it we have now and we are going to deal with the issues as they come forward.”


Story by Abena Rockcliffe-Campbell from Kaieter News

Kaieteurnewsonline.com
02 23 2018

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