The reality of trying to renegotiate the GOG – Exxon Contract

Dear Editor,
The Petroleum Agreement between the Government of Guyana (GOG) and EEPGL (Exxon) is again being discussed in a way that ignores clear legal principles and a sensible look from a realistic perspective.
Christopher Ram seems to find criticism real and imaginary to any idea or policy which he does not agree with. Today is no different. Today, 5th January 2025 Stabroek News “Ram launches scathing attack on President, VP over refusal to renegotiate Exxon deal” Ram expands his views that the Contract should be renegotiated. Therein he has published apparently legal views on the renovation of the Contract between GOG and Exxon. The arrogance of advancing arguments which read well in textbooks (second-rate texts) but have little or no bearing in the real world is naive. It demonstrates a misunderstanding of contract law and reality; it ignores the destabilizing effect such a course would have on Guyana’s reputation as a safe place for foreign investment.
The argument ignores the benefits which Guyana enjoys because of the sheer pace and scale of the Exxon investment here. It is recognised that the consensus view is that oil is a resource with a limited beneficial life with the world looking to other sources for its energy needs. The value of oil in the long term is uncertain because of the pressure to move to non-fossil fuels to combat global warming. It is a sensible policy for Guyana to seek to extract as much of its oil so that it could benefit from a price which would be to its economic benefit. It benefits no citizen to leave the oil in the ground when it may only yield meagre returns in the future.
Ram argues that the GOG should renegotiate the Exxon Contract. He recognizes principle of “sanctity of contract” is an obstacle but he refutes this as being a bar to a renegotiated contract. He offers no reasoned refutation; save an except his emotions and belief he is right. It seems he has not recognised the sheer force of the principle in the civilized world. Its breach would have dire consequences and make Guyana an unfavourable place for foreigners to invest … a pariah state. He refers to the new ‘religion of sanctity of contract’ as it sarcastically diminishes its value. He would be well advised to note it has been the recognised bedrock of contractual relations for centuries. It is the foundation of contractual relations in the civilized world and it is scrupulously protected by the Courts. So, it’s not a religion in a Court of law Mr Ram … it’s God.
Neither Ram, (nor others who have argued to renegotiate in the past,) in their arguments recognize the real effect of the “stabilization clause” in the contract. This clause, contained in the Exxon contract with GOG makes it clear that if that contract were ever changed whether by renegotiation or by amendments to our laws or even our Constitution then the GOG must pay directly to Exxon the full value by which their financial gain is reduced by the new contract. This clause will be enforceable in every situation except one in which there is consent from Exxon.
It is universally accepted that the Contract is lopsided and favours Exxon. However, legal contracts cannot be set aside simply because you think it’s unfair. Contracts are legally binding on the parties and unless you can demonstrate fraud/ deceit/ mistake one can’t simply go back on their word. Where are the grounds for renegotiation? Real legal ones not fanciful and bald opinions of utopia. No amount of ‘falling on his own sword’ self-sacrifice by the signing Minister Raphael Trotman will be enough. The then GOG and their slew of local and overseas advisers and themselves must be held accountable. That is where the fault lies.
There can be no renegotiation without both parties consenting. Pressuring and picketing for the renovation are recognized forms of duress. Duress would render any amendment obtained under those circumstances a nullity.
To continue this insane argument without offering a civilized and legally recognized solution is opportunistic and nothing more. Those advancing it are simply seeking their 15 minutes in the limelight. The Guyanese people recognize this and will not be fooled.
This Government has recognized the challenge and has sought to recover more for the country via the private sector hence the Local Content Act which has kept several billions in Guyana via Guyanese businesses. To argue that Guyana can only and should only focus on recovering a larger share via the Government is a fallacy. Guyana can recover by the Government and the private sector; both combine for returns to the country.

Yours faithfully,
Sanjeev Datadin