Home News Govt will continue securing improved benefits in new oil fields – Natural...
…says seeking renegotiation of 2016 PSA would be counterproductive
Calls for Government to push for the renegotiation of the 2016 Production Sharing Agreement (PSA) with oil-giant ExxonMobil would actually be counterproductive for Guyana.
This is according to the Natural Resources Ministry, which on Sunday explained that even though the 2016 PSA will not be renegotiated, the People’s Progressive Party/Civic (PPP/C) Government has been and will continue to, secure better fiscal terms for Guyana in subsequent oil fields.
“The Government’s position has been and will continue to be, that the 2016 PSA, shared between ExxonMobil affiliate Esso Exploration and Production Guyana Limited (EEPGL) and its partners, remains without a renegotiation as in keeping with contract sanctity,” the Ministry said in a statement.
It noted that Government is of the view, as has been underscored by President Dr Irfaan Ali and Vice President Bharrat Jagdeo, that if specific fiscal considerations are amended in the current PSA, then that could impose unfavourable effects on current and future investments in Guyana, given the current world petroleum economy.
The Ministry reiterated that the model PSA that is currently being developed by the Government, will garner more economic benefits for Guyana. And they reminded that even without the new model PSA, every oil field developed since 2020 has seen improved terms being secured.
“Notwithstanding this, the licensing for every new field to be developed since 2020 has seen significant improvements in both environmental and fiscal benefits for Guyana. This will continue to be the trend for all new investments in the Stabroek Block until the contract renegotiation period is reached,” the statement said.
It added, “The model PSA being developed will be adapted for all new petroleum activities offshore Guyana – whether it be for exploration or production operations. This includes the upcoming competitive bidding round that the Government intends to host in the last quarter of this year and other commercially viable discoveries that will be made in other oil blocks.”
It was stressed that neither the 2016 model nor any previous PSA will be applied to any other oil block where a discovery has been made. And they noted that the Government is fully aware of the amendment made to the 2016 PSA by the former A Partnership for National Unity/Alliance For Change (APNU+AFC) Government in 2019.
“The amendment saw that ExxonMobil Guyana is disallowed from recovering, through cost oil, the two per cent royalty to be paid to the nation. This modification has been implemented and enforced through the mechanisms on the payments for royalties and cost recovery conditions, and the monitoring features which set out for the governance of the cost bank regarding the projects subject to petroleum operations.”
“The recent reports in the media present that the 2019 amendment to the PSA sets the precedent for the renegotiation of the entire contract between Guyana and ExxonMobil. The Government reiterates that the contract will remain fiscally unchanged for the country and investors’ benefits,” the Government noted.
In the statement, the Ministry reiterated the Government’s belief in contract sanctity and respect for investments made by the consortium in the Stabroek Block, which include Exxon through subsidiary Esso Exploration and Production Guyana Limited (EEPGL), as the operator holding 45 per cent interest in the Block. Hess Guyana Exploration Ltd holds 30 per cent interest, and CNOOC Petroleum Guyana Limited, a wholly-owned subsidiary of CNOOC Limited, holds the remaining 25 per cent interest.
“The Government of Guyana respects the investments made by the petroleum consortium in the Stabroek Block and will continue to work assiduously, through various agencies, on every additional licence and environmental permit as has been done for Payara and Yellowtail developments.”
“These projects have shown that with the prudent management of the oil and gas sector, Guyana can garner more economic and social benefits for improved intergenerational equity of the local economy,” the Ministry said.
So far, Exxon’s total investments in Guyana is GY$1.3 trillion on its own, and over GY$3 trillion with its partners. Additionally, the joint-venturers’ exploration and production plans up to 2025 would likely increase their investments to more than GY$6 trillion.
ExxonMobil has said it anticipates at least six projects offshore Guyana will be online by 2027, with production already started in the second phase, with the Liza Unity Floating Production Storage and Offloading (FPSO) vessel in operation and complementing production on the Liza Destiny FPSO in the Liza Phase 1.
