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Govt renegotiated deal with ExxonMobil- Nandlall

Last Updated on Friday, 11 August 2023, 7:34 by Denis Chabrol

Attorney General Anil Nandlall has said his People’s Progressive Party Civic (PPPC)-led administration has renegotiated aspects of the oil production deal with ExxonMobil through changes in licenses for the development of other wells, despite iron-clad provisions of the Production Sharing Agreement (PSA) for the entire Stabroek Block.

“We have reformed the entire licensing regime,” he said during a debate on the Petroleum Activities Bill that was passed early Thursday morning by the National Assembly.

Mr Nandlall said in contrast to the 2016 PSA under A Partnership for National Unity+Alliance For Change (APNU+AFC), the licenses for Payara and other well provide penalties for flaring and the reduction of the environmental permit from 20 years to five years.

“That is the renegotiation,” he said. The government had said elsewhere that it would not renegotiate the PSA.

The Attorney General recalled that the 2016 PSA guarantees and preserves the economic benefits of the deal, despite a change in government, law or legal system that contract would restore any loss or repair to economic benefits. “This is the most sovereign and supreme document you have made in this country. That is what you and your government have condemned the people of Guyana to,” he said.

He said the Petroleum Activities Bill, which replaces the 1986 petroleum law, was modeled after review of existing legislation in the United States, United Kingdom, Norway, Ghana, Ireland, Angola, Brazil, East Timor, and Trinidad and Tobago.

Several proposed amendments by APNU+AFC, through Mr Patterson, called for the establishment of a Petroleum Commission but Mr Nandlall said there were no provisions for the establishment of that body, its members, tenure and funding. “This does not make sense. It is a phantom commission. It is an empty commission,” he remarked.

The Petroleum Activities Bill will prohibit ministers and their families from investing in oil blocks, and oil companies would provide for Value Added Tax, Corporation Tax and Income Tax by ministerial order through the National Assembly. In conjunction with the new Model PSA, the royalty would increase from two percent 10 percent, cost oil is reduced from 75 percent to 65 percent and profit oil moves from 25 percent to 35 percent.

Minister of Public Works II, Deodat Indar noted that the opposition did not comment on the model PSA

All of APNU+AFC’s amendments to the Petroleum Activities Bill were defeated by government’s simple majority. Those amendments had included ring-fencing of new production projects against claims for exploration costs as well as the application of the new law to new well developments after 2030.

Natural Resources Minister Vickram Bharrat agreed that royalties and Corporate Social Responsibility programmes are not cost recoverable.

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August 2023