“We are satisfied” with oil contract, bonus – Trotman

In light of comments that Guyana undersold itself in regard to the petroleum agreement — and more particularly the signing bonus — with US oil giant ExxonMobil, Natural Resources Minister Raphael Trotman on Friday said that Government is satisfied with the deal.
One day after Government released the 72-page contract that was signed with ExxonMobil last year, local analysts have commented that Government should have gotten more out of the contract.
In fact, Opposition Leader Bharrat Jagdeo, at the People’s Progressive Party/Civic

(PPP/C) year-end press conference on Friday, said the team representing Guyana had all the negotiating power but failed to come out with a better deal.
However, Natural Resources Minister Raphael Trotman told reporters at the subsequent post-Cabinet briefing that, despite criticisms, Government got what it wanted from the negotiations.
“Insofar as our level of satisfaction (is concerned), we are satisfied. There is no such thing — as a lawyer can tell you — as a perfect contract; there is no such thing as a perfect law; each has to be improved on,” he posited.
According to the Natural Resources Minister, the team used the contract model that was prepared after negotiations with US oil company Anadarko Petroleum Corporation back in 2012.
Back in October 2013, the Venezuelan Navy forced a seismic survey vessel hired by Anadarko, which has an exploration licence for the Roraima Block in the ultra-deep-water offshore Guyana, to cease its activities. However, the company has since indicated its interest to continue operations following ExxonMobil’s initial discovery of commercial oil back in May 2015.

Old contract
Trotman said the team built on that contract, instead of generating a new one.
“We had (the Anadarko contract) previewed… We took a decision not to go into a full-fledged negation in a way that negotiations normally go. Those can take upwards of a year and more, and can be very costly; and Government, for a number of reasons, took a decision to have a marginal negotiation and to make some adjustments – the licensing fees, some payments for capacity-building, some payments for environmental support; and, of course, the signature bonus was factored into that,” he outlined.
Trotman said the figure for the oil bonus was arrived at given Government’s intended use of the sums of money; that is, to fund the cost of the legal proceedings when the border controversy between Guyana and Venezuela is taken before the International Court of Justice (ICJ).
“We took to precedent what had been spent on legal services in the past on matters of this nature in the international tribunal, and we may have added to that. But several persons and several factors were taken into account before arriving at a figure. But certainly, we used the precedent from the 2000 matter with Suriname,” the Minister stated.
With regard to the negotiation of the deal, Trotman added that despite his expertise of not only being a lawyer of 27 years standing, but also a trained negotiator and mediator from Harvard Law School, his role was minimal.
“The country in the past has relied on the technical staff of the GGMC… Mr Newell Dennison (acting Commissioner of GGMC) and his team were the principal negotiators.
I did, of course, have a say in terms of where are we, and I would report to Cabinet from time to time. I also reported in Parliament that the Government relied on counselling and advice from Michelet & Co of Norway, which is considered one of the leading law firms in Norway and is a law firm for the Extractive Industries Transparency Initiative (EITI), so this is no ordinary law firm. They give advice on the contract, so it was not a personal negotiation done by Raphael Trotman; it was a team that was both national and international in its nature,” he noted.

Concessions
Political analyst and Chartered Accountant Christopher Ram has highlighted that the many concessions granted to the US oil giant in the Petroleum Agreement is not favourable to Guyana.
However, in defending Government’s actions, the Natural Resources Minister posited that ExxonMobil will enjoy these benefits because it was the only company that showed the capacity, willingness and courage to explore the waters in the face of Venezuela’s claim.
Meanwhile, an expert team from the Fiscal Affairs Department (FAD) of the International Monetary Fund (IMF) recently carried out a study on the emerging oil sector, following a request from Government, and has found among other things that the Production Sharing Agreement (PSA) with ExxonMobil is generous and also highlight a series of loopholes that can abuse and limit the benefits collected by Guyana from the operations.
However, Minister Trotman assured that Government would continue to work with both local and international experts that scrutinise and find loopholes, to correct these while collaborating on other areas, such as capacity-building.