While the A Partnership for National Unity/Alliance For Change (APNU/AFC) Opposition has been blaming the current Government for allegedly giving ExxonMobil a one-year extension to explore for oil under force majeure, it is actually APNU/AFC, before leaving office in 2020, that granted this extension.
On Tuesday, Vice President Bharrat Jagdeo released at least three letters written by former President David Granger and addressed to ExxonMobil Guyana President Alistair Routledge. In the letters, dated July 24, 2020, the former President approved extensions for Exxon’s holdings in the Stabroek, Canje and Kaieteur blocks.
“In further recognition of EEPGL’s indications regarding section 43 of the Petroleum (Exploration and Production) Act 1986 and the Stabroek Petroleum Agreement 2016, represented by the Minister responsible for petroleum, has determined to offer relief in respect of the Covid-19 pandemic in accordance with the following parameters (Covid-19 relief) pursuant to section 43 (3) of the Petroleum (Exploration and Production) Act,” the three letters state.
Those parameters include providing the company with an extension by waiving the period of March 11 2020 to March 10 2021, which Granger said in the letters would not be counted in the overall life span of the prospecting licences. The letters add that this timeline will be reviewed quarterly.
Among the persons who have misdirected their criticism at the current Government are former Environmental Protection Agency (EPA) head, Dr Vincent Adams, and current Parliamentarians Khemraj Ramjattan and David Patterson.
During a recent press conference, Opposition Leader Aubrey Norton had also been critical of what he had claimed was the Government’s decision to allow the postponement of Exxon’s relinquishment of 20 per cent of the Stabroek block until next year. Norton’s economic advisor Elson Lowe had also supported these claims.
“Jagdeo cannot tell this nation that it was done as a result of COVID without providing clear documentation so that we can know the rationale…the only way we could verify it is by having the documentation to be able to discern whether what he’s saying is true, or he is just being Jagdeo and formulating his realities as he moves along and send them out as if they are truths,” Norton was quoted as saying at his press conference.
At the time, Jagdeo had slammed the Opposition for this falsehood, and had said that the only extension the PPP was contemplating for Exxon had been an extension to ensure continued gas supply for the Gas-to-Energy project.
In fact, Jagdeo had questioned whether the Opposition really understood the issue, since the force majeure clause in the 2016 Production Sharing Agreement (PSA) dictated Exxon be granted an extension due to the COVID-19 pandemic.
“I don’t think they understand. That’s the problem with Norton. He thinks we’re extending the overall permit for the Stabroek block. We’re not extending the entire Stabroek block permit. We’re extending only the permit for the well that is producing, that FPSO that’s producing the gas for the Wales project.
“Now, because we’re not extending the Stabroek block, they have certain relinquishment provisions that will kick in. so that is what will happen next year. Next year, they have to relinquish 20 per cent of the Stabroek block, as per our law,” Jagdeo had explained.
Force Majeure is a French legal term meaning the occurrence of circumstances beyond control that prevent the fulfilment of a contract. The Stabroek Block co-venture partners will have until next year to relinquish 20 per cent of the Stabroek Block, since the one-year extension to explore for oil was granted in an effort to make up for the force majeure that was applied during COVID-19 that resulted in lost time.
The relinquishment clause is typically included in contracts so that companies can relinquish a portion of the block when the renewable period is up, thereby allowing other companies to buy into the respective blocks.
For the Stabroek and Canje Blocks, operators are required to relinquish 20 per cent of their blocks after the first renewal period; while those of the Demerara and Corentyne Blocks are expected to relinquish 15 per cent within this period.
Relinquishment is of particular importance, since the People’s Progressive Party/Civic (PPP/C) Government is currently auctioning 14 oil blocks offshore Guyana. Only recently, the deadline for companies to submit their bids for the oil blocks was extended to September 12, 2023, a decision the Government attributed to ongoing efforts to improve the sector’s regulatory framework.
