Renegotiating oil contract will be destructive to investor confidence – ExxonMobil official
President of ExxonMobil Guyana, Alistair Routledge, has defended the 2016 Production Sharing Agreement (PSA) – the oil contract between the companies and Guyana’s government – saying that Guyana is benefiting more from it.
And he said renegotiating that contract now will not augur well for investor confidence, noting that that ExxonMobil’s local affiliate, Esso Exploration and Production Guyana Limited (EEPGL) and its co-venturers Hess and CNOOC are already committed to spending about US$30 billion.
Routledge made these remarks on Thursday, during an engagement with members of the local media at the company’s Kingston, Georgetown, office.
There, he explained that the current profit sharing arrangement sees Guyana getting more money than the co-venturers.
As per Guyana’s 2016 oil contract, up to 75 per cent of the investment costs are recovered when oil revenues are accumulated.
The remaining 25 per cent of revenues is split equally between the companies and the government; the government also gets an additional two per cent in royalties from total revenues.
Since EEPGL, Hess and CNOOC are co-venturers in the Stabroek block, where production has begun, they share the costs and profits based on their varying stakes in the projects.
And Routledge pointedly said, “Guyanese are benefiting more than the investors.”
Not many agree since there have been consistent calls for the contract signed between the investors and the APNU+AFC government to be renegotiated.
The current Irfaan Ali-led government agrees that the contract could be better but does not want to disrupt investor confidence in Guyana. Vice President, Dr. Bharrat Jagdeo previously said what the government will do is guarantee that all future contracts have better terms for Guyana.
Already, a new model PSA is being developed. And Routledge is in favour of keeping the contract the same.
“…what is incredibly important for any country or any business is stability.
“We’ve made now over US$30 billion worth of investment commitment to the country based on the contract as it stands,” Routledge said.
He added, “To change the contract when you’ve already made that level of commitment would be very destructive to investor confidence in the Stabroek Block.”