ExxonMobil brushes aside suggestions to review oil contract

Although Government has already rejected suggestions to renegotiate the oil contract with ExxonMobil, the company itself has not been keen on taking any such steps either.
This was echoed at an oil and gas seminar on Tuesday where ExxonMobil’s Public and Government Affairs Advisor, Kimberly Brasington reiterated the company’s respect for the sanctity of every contract.
Brasington was responding to a question posed to her when she downplayed the possibility of the revised 2016 agreement be renegotiated but suggested very strongly against it.

“While I am not going to say ‘no’ or ‘yes’ – never say never – I am going to say that we believe firmly in the principle that there is real value in the sanctity of a contract and there are a lot of eyes on Guyana right now watching to see how this plays out; if this is a stable environment in which to do business,” she said.
She said the sanctity has to be respected and it must be done especially in the context of a country that is new to the industry.
According to her, investors are paying keen attention to the business climate in Guyana, hinting that the push for a renewal of any contract could be negative and may affect prospects for business opportunities.
She said, “I am not opposed to the calls for renegotiation, I am not opposed to people standing up for what they believe in but right now ExxonMobil has a contract with this Government and we intend to stick to it; we are going to hold up our side of that. We are going to do everything under it.”
Only recently, Government made it clear that it will not renegotiate the terms of the petroleum contract. Minister of State Joseph Harmon said, “The President has said that we have dealt with the ExxonMobil contract; 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.”
However, there has been heavy criticism of the contract, even from the President’s own petroleum advisor that the two per cent royalty and the tax regime does not meet global standards.
But the Opposition has said it is willing to support any motion made by the coalition Government in the National Assembly to have the oil contract renegotiated with ExxonMobil, once it is done from a bipartisan position and will benefit the Guyanese people.
Opposition Leader Bharrat Jagdeo, who has repeatedly criticised Government for renegotiating a bad oil deal, said it would support changes to the Production Sharing Agreement (PSA) with ExxonMobil because he believes Guyana deserved a better deal especially given the continuous enormous oil finds.
Jagdeo hinted that while the Opposition would support the move, it would not initiate it, since it could then be misconstrued that his party wanted to undermine investment in the country. “I don’t want to say ‘we’ because next thing you are going to hear is that ‘we are killing … [investments]’,” he said.
The Opposition Leader said 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 concerned, 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.
Although Government had managed to get two per cent royalty on gross earnings and 50 per cent of the profits of the oil proceeds when production starts in 2020, this has been heavily criticised. Many political, financial and social commentators claimed that the percentages were too low.
Research conducted by the Oil and Gas Governance Network, a group of financial analysts, accountants and economists, reveals that Guyana has sold its oil at US$29 billion below market value.
The group was started in 2017 with the aim of informing the public about oil matters in Guyana and advocating for transparency and accountability in the emerging oil and gas sector.