Vice President Dr Bharrat Jagdeo has posited that the Guyana Government will not be weakening its new Production Sharing Agreement (PSA) to suit US oil giant ExxonMobil, which has since expressed some concerns.
At a press conference earlier this week, ExxonMobil Guyana President Alistair Routledge said that while the company had participated in the recently concluded bidding round for the 14 oil blocks offshore Guyana, it will not sign the new PSA.
He specifically expressed concerns about the timeframe set for the aggressive work programme as well as the time periods for relinquishment.
However, Jagdeo today contended that, “if ExxonMobil here in Guyana, or in Texas, believe that we must take every one their comments on our draft PSA and accept those comments fully and whole heartedly then incorporate them in the new PSA, they need to think again…”
According to the Vice President, “this is not the era where they will draft a cabinet decision for the Government of Guyana [or] for the Ministry of Natural Resources and the Ministry will then take a Cabinet decision drafted by Exxon to the Cabinet for approval…”
“This is a new government, a different dispensation; so if they were sweetened by that approach well it’s not gonna happen now.”
The new PSA will guide the terms and conditions of future oil contracts. Under new conditions, Guyana stands to benefit from as high as a US$20 million signature bonus for the deep-water blocks and US$10 million for the shallow-water blocks.
Additionally, the new PSAs include the retention of the 50-50 profit-sharing after cost recovery; the increase of the royalty from a mere two per cent to now a 10 per cent fixed rate; the imposition of a 10 per cent corporate tax, and the lowering of the cost recovery ceiling to 65 per cent from 75 per cent.
Currently, the 2016 oil contract for the Stabroek Block signed between the ExxonMobil-led co-venturers and the then APNU+AFC Government pegs cost recovery at 75 per cent. The remaining 25 per cent of revenues is spilt 50/50 between the government and the co-venturers, while the country also gets a two per cent royalty from total revenues.
This PSA has come under heavy criticisms over the years with many arguing that Guyana could have gotten a better deal.
According to Jagdeo, his government does not believe the conditions in the new PSA are “onerous”.
“They were canvased by an international advisor and we’re told that they are not onerous and they would allow for effective management of this sector,” he emphasised.
“So, if they don’t want to accept the conditions of the new PSA – now, I’m not saying that its hard and fast and that there’ll be nothing like minor changes when we get to the contract stage, but the core terms; not the fiscal terms. Those fiscal terms are settled… We’re not gonna weakened the new PSA to suit ExxonMobil,” the Vice President contended.
“So, if they don’t wanna sign it; fine, they don’t need to sign it. We’re not going to just change this PSA and make it the way Exxon wants it. That probably happened in 2016 but it’s not gonna happen now.”
Jagdeo went on to express that, “Mr Routledge should look at their capacity. We want them to do well in Guyana. We want them to produce the oil. We want them to produce increasing amounts of oil. We want to them to make money but we want to ensure the country gets its fair share of the money. We want our oil to produce in a safe manner, protecting our people. We want Guyanese to benefit from this production through local content.”
