– says oil giant to use equipment for onshore base
After details of the contract between Guyana and ExxonMobil were released, some observers were left flabbergasted that the Government had pre-approved importation of a number of items, including All Terrain Vehicles (ATVs), when the company’s operations are largely offshore.
Government, however, is contending that these items are all necessary for the oil
Natural Resources Minister Raphael Trotman
giant’s operations. At a press conference on Thursday, Natural Resources Minister Raphael Trotman claimed that the equipment would support Exxon’s future on-shore base.
“May I recommend some research?” Trotman asked in response to questions from the media. “There’s something known as an on-shore base, and maybe I’m hoping to visit one nearby. But these are large areas. We’ve established a small modular on-shore base at Muneshwer’s.”
According to Trotman, “There’s mud, there’s pipe, and there’s grease. ATVs are normally the mode of transportation on an on-shore base. We’re hoping to do one in Berbice and maybe one in Essequibo. And they sometimes cover 20 acres of land. They’re not nice, pristine places; they are filled with dirt, so there’s nothing startling about ATVs. Even though you’re off-shore, you have to have an on-shore presence.”
According to Annex D of the 2016 oil agreement, Exxon will be able to import ATVs, bulldozers and forklifts, among other things. Article 21 of the contract exempts Exxon from having to pay duty, Value Added Tax, levies or imposts on all equipment required for its operations.
Article 15.4 of the renegotiated contract also provides for the Government itself to pay the company’s income tax. To facilitate this, the oil company has to submit tax returns to the Government.
In addition, Article 32 stipulates that Government cannot modify the contract, or increase any fiscal obligation the company has. This therefore puts a cap on the taxes, royalties, duties, fees or charges outlined in the contract.
Government also has to compensate the operator if a change to existing laws causes loss of revenue for the company.
According to Article 32.3 “If at any time after the signing of this agreement there is a change in the laws of Guyana… and such a change has a materially adverse effect on the economic benefits, including those resulting from the fiscal regime provided by this agreement… the Government shall promptly take any and all affirmative actions to restore the lost or impaired economic benefits to the contractor, so that the contractor receives the same economic benefit under the agreement that it would have received prior to the change in law or its interpretation or application.”
The contract goes on to say: “the foregoing obligation shall include the obligation to resolve promptly, by whatever means may be necessary, any conflict or anomaly between this agreement and any such new or amended legislation, including by way of exemption, legislation, decree and/or authoritative acts.”
On-shore base
After he was appointed Country Manager of ExxonMobil’s local operations, Rod Henson had announced that the company would be relocating its on-shore operations from neighbouring Trinidad and Tobago to Guyana.
He had told participants at a meeting that it was not a case whereby ExxonMobil would be looking to build a facility for its support services, but would rather put out tenders, and anyone interested in providing the shore-based services could present a proposal.
Trotman had, in 2016, announced that Cabinet had given its ‘no objection’ to the establishment of the on-shore industrial site in the area of Crab Island, Berbice. He had said it would be forged through the joint efforts of the ministries of Natural Resources, Public Infrastructure and Business. Construction was announced for early 2017, and the investments from the private sector and Government’s infrastructural work and support were to be equivalent to US$500 million; but there have been little details on the Crab Island proposal.
