The Guyana government on Thursday said definitively that it would not be revising the Production Sharing Agreement with ExxonMobil, the same day that Opposition Leader Bharrat Jagdeo questioned why government did not negotiate better contracts than those signed by former Presidents Janet Jagan and Donald Ramotar.
The 2016 agreement between government and ExxonMobil contains a number of contentious clauses that are almost identical to those contained in the CGX Resources signed by President Donald Ramotar who has since said the model agreement dates back to the 1980s.
Minister of State, Joseph Harmon made it clear that President David Granger has firmly decided that his administration would not be re-opening the contract for possible amendments. “The President has said it that we have dealt with the ExxonMobil contract and that we are not going back on it. 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,” he said.
At the same time, Harmon said issues have arisen and government would be guided by international experts based on best practice in going forward. The Minister said government was looking to tap into the benefits of the contract.
Jagdeo, however, noted that ExxonMobil’s concession is multiple times bigger than CGX Energy, and a lot of the provisions in the CGX Energy contract were not in the ExxonMobil contract signed by then President Janet Jagan.
He believed that the David Granger-led governing coalition appeared to have given into ExxonMobil’s demand that their new agreement must not be better than the one the company had signed with then President Janet Jagan but must be similar to the CGX Resources agreement that was inked by then President Donald Ramotar.
“This government has government has argued that no future investor can expect comparable treatment to the one that they gave to ExxonMobil so that could not have been a valid argument because our own government has argued that future concession holders cannot get the same thing like ExxonMobil; they can’t get comparable treatment.
Yet it seems as though they caved to that argument in the negotiation so the whole issue of comparable treatment, if they argued for that, would have been a mute issue. The circumstances were different, the size of their holdings was different and they had no legitimate expectation to the provisions in the CGX contract because they had the Janet Jagan agreement which was up for renegotiation which didn’t have many of those provisions,” he said.
In that regard, the Opposition Leader further argued that there was no justification for the Granger-led administration to do so because Natural Resources Minister, Raphael Trotman had known at the time of renegotiation with ExxonMobil that Guyana had 3.2 billion barrels of recoverable oil, the company was finding more there was also a great interest in Guyana “unlike in the past when we really had to press people to come and take up these blocks (concessions).”
Jagdeo appeared to suggest that the CGX-Ramotar agreement was bad compared to the original ExxonMobil-Janet Jagan agreement. He acknowledged that ExxonMobil would legitimately seek to have a better deal, but government should have pointed to other features “It’s how we argue these thing so we were badly served by the negotiators,” he added.
Government has come in for serious criticism for signing an ExxonMobil agreement that provides for a 2% royalty and a US$18 million signing bonus. However, Minister of Natural Resources Raphael Trotman has said the deal took into consideration, political, border security and financial risks.