…warns that attempts to bind Guyana in long-term contract will be reviewed
Amid revelations that the Government invited various companies to come and pitch proposals to buy Guyana’s oil, Opposition Leader Bharrat Jagdeo has warned that any attempts to tie the country into a long-term agreement now will be reversed if his party gets into Government.
Jagdeo was at the time speaking at his weekly press conference and his comments came after a Bloomberg article revealed that companies from the United States, Switzerland and England would be paying Guyana a visit to vie for the opportunity to sell Guyana’s oil.
“They are busy trying (to procure companies),” Jagdeo revealed. “They called a company, asking if they can put in a proposal to lift our share of profit oil. But they don’t really want that company”.
“They want to say they consulted widely because behind the scenes, they are working on a deal to tie up a long-term contract for the lifting of our share of the oil. And we’re never going to accept that”.
Jagdeo suggested that with Guyana less than 80 days away from elections, Government can use ExxonMobil on an interim basis to market Guyana’s share of oil, rather than sign a binding contract at a time when Government should only be engaged in routine functions until elections.
“That’s why we argued that if, as the Department of Energy claimed, that our share of the profit oil will come in March of so, then why not allow Exxon to sell for one or two months, until after the elections and put the money in an account. And then you have an open and transparent way of selling our oil through a bidding process”.
“And every company that comes, comes with a track record. And they have to bid for who will sell our oil and what price. So while all of this smoke screening is going on, they are tying up corrupt transactions behind the scene. If they stick us with a long-term contract, we’ll be in trouble”.
Jagdeo said that the coalition government was even worse than a caretaker government, it was, in fact, an illegal one. While the High Court had declined to pronounce the Government illegal, Jagdeo noted that the Government had no legal mandate.
“Maybe liabilities if we break the contract. But we are arguing, they have no right to sign any contract. Because they’ve not just become a caretaker government, they are an illegal government. They could just say the holding arrangement is that anything would piggyback on Exxon, we would check the quantity of oil and leave it at a technical level”.
Guyana’s profit-sharing arrangement with ExxonMobil is for 50 per cent of profit oil. But with Exxon reclaiming its investment costs as cost oil, it means Guyana will initially get 12.5 per cent of profit.
Originally scheduled for 2020, first oil production has been moved up to sometime this month. It is understood that the initial crude lifts will be one million barrels. With Guyana already agreeing for the first lift to go to Exxon due to “impurities”, Guyana is not expected to get its share until February to March.
When it comes to the system governing the crude lifting, which simply means the oil is loaded onto the vessel for transport, Energy Department Head Dr Mark Bynoe had revealed in November that the crude lifting agreement was near completion. He had also laid down timelines for first oil and lifting of the crude.
“The Department has signed a contract with a crude marketing specialist, and a commercial specialist, who will be assisting the Department’s preparations for first oil. The Department is working to conclude a similar contract with a petroleum accounting specialist and a contract administrating specialist”.
“The crude lifting agreement is being finalised and has advanced significantly. The CLA is expected to be completed in the new week and Government will be a signatory as a lifter of crude, along with the Stabroek co-venturers”.
According to Bynoe, their agreement will be based on the Association of International Petroleum Negotiators Crude Lifting Agreement. He explained that it will be customised to reflect the reality of Guyana’s sector.
But with the Government having fallen to a No-Confidence Motion since December 2018, and the three months’ constitutional deadline for holding elections having long since lapsed, Guyana is long overdue for elections. Elections are now due on March 2, 2020, and the Opposition wants to ensure the Government does not carry on as though it’s business as usual.