Ask ExxonMobil to renegotiate contract- Former Finance Minister Jordan

Last Updated on Sunday, 15 December 2024, 20:43 by Writer

Former Finance Minister Winston Jordan on Sunday urged the Guyana government to formally ask ExxonMobil to renegotiate the 2016 Production Sharing Agreement (PSA), even as he accused President Irfaan Ali and Vice President Bharrat Jagdeo of flip-flopping.

“I see nothing wrong in writing to Exxon, initiating the process of renegotiating the contract. Until you do that, you do not know what will be Exxon’s response,” Mr Jordan said on a pro-PNCR programme, Nation Watch.

He said government could initiate such talks and examine the benefits for both sides, even as he did not rule out the negotiations being fruitless. “If the negotiations go south, they go south but you just can’t sit down and hollering ‘sanctity of contract, sanctity of contract’ and you don’t even write a letter saying circumstances have changed and in the context of those circumstances, we would like to sit down and initiate the process of renegotiating,” said Mr Jordan, who is also the former Budget Director of the Ministry of Finance.

ExxonMobil Guyana President, Alistair Routledge in October, 2024, publicly ruled out his company consenting to renegotiation of the PSA. ““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 had said then.

While Dr Ali and Mr Jagdeo have insisted that they do not support renegotiation and instead back sanctity of contracts, videos of the two top Guyana government elected officials show them promising pre-2020 to renegotiate the contracts. “We’ve made it very clear that we’ve got to go towards relooking at these contracts, renegotiating these contracts, looking at contract management and all of these things. Everything we have to relook at because we have to ensure that our country does not get the wrong end of the stick,” Mr Jagdeo had said then.

Jagdeo had said then, “The oil companies—every time there is a find out there, our people should be sad because nothing comes our way. We’re going to renegotiate those contracts because that’s not what we had in mind.”

Mr Jordan said during a renegotiation, the Guyana government could inform ExxonMobil that the existing PSA would remain in force.

Under the existing PSA, ExxonMobil and its joint venture partners are entitled to 75 percent cost recovery and Guyana 12.5 percent profit oil.

The 2016 PSA, which governs the entire Stabroek Block, was signed when only one discovery was made but since then ExxonMobil has made more than 30 other discoveries.

In contrast, the 2023 Petroleum Activities Act provides for an increase in royalty from 2 percent to 10 percent, profit oil from 12.5 percent to 17.5 percent, and 10 percent corporate tax.