President of ExxonMobil Alistair Routledge on Wednesday reiterated that the company has no interest in renegotiating the 2016 Production Sharing Agreement (PSA).
His comments, made at a news conference at the company’s New Market Street, Georgetown Headquarters, come in light of fresh remarks by opposition politicians who are seeking election to government next year.
For instance, Leader of the Opposition Aubrey Norton – who is also the leader of the Peoples National Congress (PNC) – has said if he becomes president, he will invoke a clause in the PSA which allows the government to engage ExxonMobil.
“We have said Article 32.1 of the PSA provides a wide range of opportunities for us to engage ExxonMobil and increase the benefits for the people of Guyana and we continue to be committed to that because the particular article is clear and provides avenues for us to engage Exxon and increase the benefits to the people of Guyana,” Norton has said.
The Alliance For Change (AFC) has also made promises to revise the oil deal.
Both the PNC-led A Partnership for National Unity (APNU) and the AFC made up the government when the 2016 PSA was negotiated and signed.
That PSA has received widespread criticisms for, among other things, having low royalty – a meagre two per cent, lack of ring-fencing provisions, and sweeping cost recovery clauses.
Routledge, however, has reiterated that ExxonMobil is not interested in a renegotiation of the contract.
He explained, “we always need to step back and remember that this agreement has been very successful for Guyana in attracting investment into a basin where nobody had made any discoveries.”
“We can always cherry-pick how somebody has higher royalty or lower royalty, pays this tax or that tax but it’s about the total amount of revenue that’s generated out of the petroleum agreement that’s really important to the country…So, you can have a larger percentage of a small number or you can have a fair share of a much larger number, and ultimately that’s more meaningful for the country,” he added.
Asked specifically about the clause in the PSA which Norton cited, Routledge expressed, “we have no interest to invoke that article.”
The ExxonMobil Guyana President emphasised that “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 investment.”
Though not pleased with the 2016 PSA, the current Peoples Progressive Party (PPP) administration is sticking with it on the basis that any move to renegotiate would have major implications on investments in the country.
In fact, President Dr Irfaan Ali has previously said: “Let us say we stopped production tomorrow, stopped all the production, what is the consequence? …All those who’ve invested… who took a loan, build apartments, new hotels going up, the man who had three taxis and invested in 200 taxis now. What is the exposure to them and then what is the exposure to the financial institutions that financed those investments based on projection?” the Head of State questioned.
“So, what we did, we said ‘we have something that was already signed’. We agree we’re going to efficiently manage it to extract as much benefits as possible and all future agreements are going to be different,” President Ali had added.
Nevertheless, the PPP Government has developed new model PSAs, with better terms for the country. Unlike the 2016 oil contract, the new agreement outlines an increase in royalty from two per cent to 10 per cent, a 65 per cent cost recovery as opposed to the previous 75 per cent, and the retention of the 50-50 profit-sharing.
