A strategic response to calls for renegotiation of the ExxonMobil agreement

Dear Editor,
The recurring calls for renegotiation of the 2016 Production Sharing Agreement (PSA) with ExxonMobil, championed by prominent, patriotic voices such as Mr. Christopher Ram, demand a measured and deeply introspective response, one rooted in historical awareness, legal pragmatism, and economic foresight.
While the concerns regarding the PSA’s apparent imbalances are not without merit, the suggested course of aggressive renegotiation is a high-stakes gamble that could imperil Guyana’s economic stability, investor confidence, and long-term growth trajectory.
The Legal Principle: Sufficiency, Not Adequacy, in Contractual Consideration:
In the realm of contract law, the doctrine of consideration does not require adequacy but rather sufficiency. This legal cornerstone emphasizes that fairness, as judged retrospectively, is secondary to the enforceability of agreements voluntarily entered into by both parties. In 2016, ExxonMobil assumed extraordinary financial risks in a frontier oil market, and its investments have since borne fruit, not merely for the corporation but for Guyana as well.
To suggest renegotiation without ExxonMobil’s willingness reduces the process to an exercise in coercion rather than dialogue. Negotiation, by definition, presupposes mutual interest. If ExxonMobil remains disinclined to revisit the existing terms, then any attempt to impose revisions would be seen, not as negotiation, but as an act of unilateral economic aggression. History is unkind to nations that have chosen this path.
Historical Precedents: The Grave Cost of Miscalculation:
Global history offers sobering lessons on the consequences of attempting to renegotiate resource contracts through forceful means.
• Venezuela: Under Hugo Chávez’s nationalization policies, oil contracts were aggressively restructured and foreign investors were sidelined. The outcome was an unprecedented collapse of the energy sector, rampant capital flight, and a humanitarian disaster.
• Guyana Under former President, Forbes Burnham: The 1970s-era nationalization policies intended to assert resource sovereignty instead plunged the country into economic stagnation and isolation from international capital markets.
• Ghana and Panama: Both nations pursued abrupt resource contract renegotiations without adequate leverage or planning, resulting in significant economic setbacks and diminished investor confidence.
In each case, short-term populist victories gave way to long-term economic paralysis. These examples are not relics of the past, they are cautionary beacons warning against repeating avoidable mistakes.
The Fallacy of ‘Fairness’: Greed Cloaked in Righteousness:
Advocates of renegotiation often frame their arguments through the lens of fairness. Yet, fairness in global energy contracts is not a fixed or static principle, it is a fluid construct, shaped by leverage, negotiation dynamics, and geopolitical realities.
While it is indisputable that the PSA appears disproportionately favourable to ExxonMobil, the world is not governed by abstract notions of moral equity but by pragmatism and power dynamics. Calls for a “fair share” can sometimes blur the line between legitimate economic grievances and unrealistic expectations cloaked in populist rhetoric.
The question we must ask ourselves is this: Are we willing to risk economic disruption, legal arbitration, and investor flight in pursuit of an ideal that may ultimately cost us more than it yields?
Strategic Optimization: Leveraging Existing Opportunities:
The prudent path does not lie in attempting to strong-arm ExxonMobil into renegotiation but in optimizing the opportunities already available within the existing framework. This includes:
• Enforcement of Contractual Obligations: ExxonMobil must be held rigorously accountable for every fiscal, operational, and environmental obligation outlined in the PSA. Transparency and oversight must be non-negotiable.
• Strategic Reinvestment of Revenues: Oil revenues should be strategically reinvested into healthcare, education, infrastructure, and technology, creating income-generating sectors that reduce long-term economic dependence on oil.
• Institutional Capacity Building: Guyana must invest in technical training, strengthen its oil and gas regulatory institutions, and build robust frameworks for future negotiations.
• Future Contractual Leverage: The lessons from the current PSA should inform subsequent agreements. Future negotiations must begin from a position of knowledge, preparation, and economic leverage.
• Investor Confidence: Stability and predictability in investment policy are critical. Abrupt or aggressive renegotiation attempts would irreparably damage Guyana’s reputation as an investment destination.
Greed vs. Strategic Prudence: Choosing Stability Over Symbolism:
The PSA may be far from perfect, it may even be viewed as grossly imbalanced but the path forward must be informed by strategic pragmatism, not reactionary fervor. Half a loaf, as the adage goes, is better than none.
Rather than jeopardizing the entire arrangement through ill-conceived attempts at renegotiation, Guyana should focus on extracting maximum value from the existing deal. Through responsible governance, strategic reinvestment, and diversification of the economy, perceived imbalances can be mitigated over time without the seismic risks associated with economic brinkmanship.
Leadership and the Weight of Responsibility:
President, Dr. Irfaan Ali and Vice President, Dr. Bharrat Jagdeo are faced with an unenviable but crucial responsibility to secure the nation’s long-term future while navigating the treacherous waters of resource governance. True leadership lies not in capitulating to populist pressure, but in making difficult, often unpopular decisions rooted in wisdom, foresight, and a clear understanding of global economic realities.
The ExxonMobil agreement represents not just a contract, but a foundation. It is now up to us to decide whether we will use this foundation to build a resilient, diversified economy, or whether we will crumble it beneath the weight of reckless ambition masquerading as justice.
A Crossroads for Guyana:
Guyana stands at a pivotal moment in its history. The choices we make today will determine whether we seize this opportunity for transformation or squander it through misguided adventurism.
Let us not chase the illusion of fairness through confrontation. Instead, let us build fairness through responsible stewardship, intelligent reinvestment, and an unwavering commitment to the national interest.
In the final analysis, wisdom and pragmatism, not intelligence and populism, will pave the way for a prosperous and resilient Guyana.

Yours sincerely,
Professor,
Dr Stanley AV Paul