Opposition would support motion to renegotiate oil contract – Jagdeo

The Opposition is willing to support any motion made by the coalition Government in the National Assembly to have the oil contract renegotiated with ExxonMobil, once it is done from a bipartisan position and will benefit the Guyanese people, Opposition Leader Bharrat Jagdeo has declared.
Jagdeo, who has repeatedly criticised Government for renegotiating a bad oil deal, told a media conference on Thursday that his party, the People’s Progressive

Party/Civic (PPP/C), would support changes to the Production Sharing Agreement (PSA) with ExxonMobil which will benefit Guyana.
“If the Government comes with a motion of that nature, once the motion is in defence of Guyanese…ExxonMobil has to do what’s best for its shareholders and anything that I see that will bring greater benefits to my country, my people then we will support it; that’s a generic position,” he said.
The PPP/C General Secretary said his party was ready to share its views at any moment, “because this is a national patrimony, that is why we called for a nonpartisan, non-political approach, take all of the politicians out of the Petroleum Commission … it should be purely technically managed and that would be good for long-term relations between the country and ExxonMobil too”.
Jagdeo hinted that while the Opposition would support the move, it would not initiate it, since it could then be misconstrued that his party wanted to undermine investment in the country. “I don’t want to say ‘we’ because next thing you are going to hear is that ‘we are killing … [investments]’,” he said.
The Opposition Leader said that the contract in its current form could harm Guyana in the long run based on changes in four clauses which benefit the oil company more than the country. The four clauses concern, he posited, the extension of the agreement, the stability clause surrounding taxes, the changes to the relinquishment requirement and the regulation of the gas sector.
Jagdeo said if the gains for ExxonMobil from these clauses were measured and compared against what Guyana would receive, the country and its people had sacrificed long-term benefits for short-term gains because of Government’s unpreparedness and incompetence in negotiating a solid new oil contract.
Asked to comment from the point of view of a former Head of State on whether the oil agreement could in fact be renegotiated, Jagdeo noted that it must be something that both parties agree to, because it could lead to multiple complex issues and a host of continued disagreements.
He told the media, “Anything that any sovereign Government negotiates with a second party, with another party, could be renegotiated if the other party agrees to come to the table. It could be done amicably. If you pursue it and the other party does not agree with it, then you end up in a dispute.” The Opposition also stated that he would rather support an amicable approach to this issue.
Although Government had managed to get two per cent royalty on gross earnings and 50 per cent of the profits of the oil proceeds when production starts in 2020, this has been heavily criticised. Many political, financial and social commentators claimed that the percentages were too low.
Research conducted by the Oil and Gas Governance Network (OGGN), a group of financial analysts, accountants and economists, reveals that Guyana has sold its oil at US$29 billion below market value.
The group was started in 2017 with the aim of informing the public about oil matters in Guyana and advocating for transparency and accountability in the emerging oil and gas sector.
According to the entity, in the past several years, ExxonMobil’s return on capital has been around 16 per cent. A similar rate of return on the Guyana oil fields would give ExxonMobil US$63 billion based on ExxonMobil’s current estimate of 3.2 billion barrels of oil. Instead the Petroleum Agreement signed by Natural Resources Minister Raphael Trotman will give ExxonMobil and its partners around US$92 billion!
It was explained that with Guyana’s population of approximately 750,000, this deal with ExxonMobil and partners would cost every Guyanese citizen – man, woman and child – about US$38,666 each.
The OGGN said the Government appeared to have been totally unaware of the market for oil and the opportunities for securing a better deal for Guyana. A rate of return of 6.7 per cent for ExxonMobil and its partners on the Guyana assets would have given Guyana a massive additional US$53 billion, it said.