ExxonMobil rules out renegotiating Production Sharing Agreement, despite PNCR Norton’s plan

Last Updated on Thursday, 10 October 2024, 8:47 by Writer

ExxonMobil Guyana’s President, Alistair Routledge on Wednesday almost totally ruled out any renegotiation of the Production Sharing Agreement (PSA) because it would adversely impact on the company’s planned US$55 billion investment in Guyana.

“We have no interest to invoke that Article. As I say, we’ve made US$55 billion worth of commitment to the country. To go back and to undermine the basis of that investment would seriously challenge any future investments,” he told a news conference.

He cautioned that if the basis for the investment changes, including at least an increase in the royalty from 2 percent to 5 percent, it would undermine its basis if the original numbers change. “If we start to have uncertainty around the basis for the investment, not just the geologic risk, the execution risk, then it seriously starts to undermine that investment thesis,” he said.

He made known the company’s position just days after Leader of the Opposition and the People’s National Congress Reform (PNCR), Aubrey Norton announced that his 20-point plan for the hydrocarbon sector should he win the 2025 general elections includes invoking Article 32.1 of the PSA that states the company must give permission for any of several things, including renegotiation, to be done with the PSA. “Except as may be expressly provided herein, the Government shall not amend, modify, rescind, terminate, declare invalid or unenforceable, require renegotiation of, compel replacement or substitution, or otherwise seek to avoid, alter, or limit this Agreement without the prior written consent of Contractor.”

He restated that the PSA was crafted at a time of high risk when Guyana was trying to attract investment. Asked whether the company believed that Guyanese were entitled to more of the revenues now that the Guyana-Suriname Basin has been de-risked, Mr Routledge said investments and revenues were hinged on the existing agreement covering 30 years.

Mr Routledge argued that it is better to have a “fair share of a much larger number and ultimately that’s more meaningful for the country” instead of a large share of a smaller number.

At least 6,200 Guyanese are employed, representing 75 percent of the workforce in the oil and gas sector.