GEORGETOWN, Guyana, Friday January 12, 2018 – The Private Sector Commission (PSC) has expressed concern about the recently released petroleum agreement between the government and US oil giant Exxon Mobil, saying it’s deficient in several key areas.
The PSC has further suggested that better negotiators should be hired in the future.
Under the existing agreement with Exxon which has made major oil discoveries in Guyana recently, the government will receive two per cent royalty and stands to benefit upwards of US$300 million annually when oil production begins in 2020. Guyana will also get 50 per cent of the profits from oil production.
Although saying the disclosure of the agreement bodes well for a transparent and accountable oil and gas industry, the PSC said much more could have been done to incorporate local content, and it was expecting greater benefits would have accrued to local businesses.
“This, we find, is sadly lacking,” it said in a statement.
The Commission also expressed concern that Guyana will be left to bear the costs of unsuccessful exploration.
“A matter of great interest also is the fact that given the early stage of development, Guyana does not have the right to renegotiate the terms of the agreement….We are concerned, since this agreement encompasses the entire Stabroek Block, an area of 6.6 million acres of water with a 3.2 billion barrel of equivalent oil (BOE) so far. With the projected massive oil discoveries, the Commission believes that there should be increased flexibility given to the Government of Guyana to ensure a fair and equitable deal on both sides,” it also noted.
Further pointing out that the cost of energy is the primary limitation to the expansion of business and growth in Guyana, the PSC said there is nothing in the agreement to indicate that with Guyana owning such large oil reserves, that would translate into reduction of the costs of energy to Guyanese.
“The business sector and general populace of Guyana deserve to benefit directly from the abundance of oil at its disposal and we look forward to seeing future agreements for other blocks offshore include provisions with greater benefits to Guyana and its people,” it said.
“We also expect that, for all other blocks offshore, the agreements with operators/contractors will consist of provisions that will ensure Guyana receives more royalty, rents, training and development for Guyanese and better local benefits for all Guyanese through the enlisting of the services of world class negotiators who can competently negotiate with major oil companies.”