Guyana to seek better royalties, terms for future oil contracts – Jagdeo

Vice President Bharrat Jagdeo has reiterated the People’s Progressive Party/Civic (PPP/C) Government’s commitment to ensuring that Guyana gets more benefits from future oil deals.

According to international news agency Reuters, Jagdeo said on the sidelines of the Offshore Technology Conference (OTC) in Houston, Texas, that Guyana aims to increase its oil royalties and revamp other contract terms as part of a new profit-sharing agreement (PSA) for future crude and gas projects now in their draft stage.
While in Opposition, and after assuming office in August 2020, the PPP/C Government held that it would seek to renegotiate the PSA with ExxonMobil, who, along with its co-venturers Hess and CNOOC, are operating the oil-rich Stabroek Block. In fact, the Vice President had contended that the new Government would instead seek to get better terms and conditions for other blocks offshore Guyana. This position was reiterated by Jagdeo, who led Guyana’s delegation to attend the OTC in Houston.
“We have made it clear that in any new PSA we negotiate for those blocks, the conditions will be very, very different than the ones from the Stabroek block,” Jagdeo was quoted as saying in the Reuters article on Tuesday.
The former APNU/AFC Coalition administration had come in for heavy criticism over the 2016 deal it signed with the U.S. oil major. The agreement has been criticised for low royalty – a meagre two per cent, lack of ring-fencing provisions, and cost oil claims that would see Guyana losing billions, among other issues.
But according to the Reuters report, Jagdeo said, “All the deficiencies of this contract will be addressed,” in future deals.
ExxonMobil is operating the 6.6 million acres Stabroek Block, where over 20 discoveries have been made since 2015, when it first struck crude. However, the US oil giant is also a major shareholder in both the Canje and Kaieteur blocks offshore Guyana. The Guyanese Vice President previous noted that when the company applies for licensing on those blocks, it would not get the same conditions as it did in the Stabroek Agreement under the Coalition Government.
However, the Reuters article stated that Jagdeo said the new PSA with Exxon will be tougher, and could be ready “within six months or so.”
Only back in May, the PPP/C Government, through the Environmental Protection Agency (EPA), was forced to modify the Environmental Permit for the Liza-1 Development Project to include, among other things, a fee of US$30 per tonne of excess carbon emissions that is flared. This was after the company had been flaring excessively due to technical issues with its gas compression system onboard the Liza Destiny FPSO.
Based on calculations, Jagdeo had reported that the oil company had racked up a fee of some US$1.3 million for a 36-day flaring period.
In the contract signed with the Coalition regime, there was no provision for flaring.