“We have dealt with the ExxonMobil contract and we are not going back on it, it was dealt with at Cabinet and the President has pronounced on the matter and that is the final pronouncement as far as we are concerned.”
These were the words of State Minister Joseph Harmon as it pertains to calls from financial experts, stakeholders and the Opposition, among others, for the ExxonMobil contract to be renegotiated.
President David Granger, had said that there is no immediate intention to to review the contract between Guyana and ExxonMobil, indicating, however, that the matter is before Cabinet.
Harmon however, told media operatives at a Post Cabinet press briefing on Thursday that the contract itself was not a matter discussed at Cabinet. “I would not want to get into the nitty gritty of whats in the contract itself because that is not a matter which we dealt with at Cabinet” he said.
According to Harmon “these are not matters which as a Government we have gone back too, or gone back on. We are looking at moving forward, we are looking at the benefits to be accrued from this contract and from all future contracts.”
His remarks comes on the heels of criticisms from many experts who after perusing the released petroleum agreement strongly believe that it should be renegotiated since according to them the contract is more in favour of ExxonMobil than Guyana.
Just recently Presidential Adviser on Petroleum, Dr Jan Mangal, at an event held at the University of Guyana said that Guyana’s contract with the oil giant can be renegotiated and the royalty Guyana is receiving is too low compared to global standards.
Under the renegotiated 2017 agreement Guyana receives two per cent royalty on earnings from ExxonMobil’s oil sales while the US oil giant would not be required to pay taxes on its share of the profits.
Moreover, in addition to sharing 50 per cent of the net profits—profits declared after the initial investments would have been repaid from any earnings.
According to the President’s Petroleum Adviser that is low compared to global standards. He also raised concerns about the system used to negotiate that agreement and also the expertise of the persons doing the negotiating.
Opposition leader Dr Bharrat Jagdeo had said that the contract in its current form could harm Guyana in the long-run based on changes in four clauses which benefit the oil company more than the country.
The four clauses he posited are the extension of the agreement, the stability clause surrounding taxes, the changes to the relinquishment requirement and the regulation of the gas sector.
Jagdeo said if the gains for ExxonMobil from those clauses are measured and compared against what Guyana will and has received – which he calculated to be US$3B annually –the country and its people have sacrificed long-term benefits for short term gains because of Government’s unpreparedness and incompetence in negotiating the new oil contract.