ExxonMobil hails Guyana’s position on contract review, not renegotiation

August 26, 2020

Source

President of ExxonMobil Guyana, Alistair Routledge.

ExxonMobil on Wednesday welcomes the Guyana government’s position that it would review rather than renegotiate oil contracts as that would cause investor uncertainty.

“We have had very little discussion with the government. What they have emphasised is that they will review the contracts but they are not seeking to renegotiate the contracts and I think that’s  really important for the country for the long term because international contract sanctity is very important to all oil companies,” President of ExxonMobil Guyana, Alistair Routledge said.

He cautioned that if negotiated and settled contracts are changed that could affect investments that span 20 to 30 years. The ExxonMobil Guyana President disagreed that the Production Sharing Agreement was more in favour of the consortium under the banner of Esso Exploration and Production Guyana Limited but it is balanced.

Mr. Routledge said a contract review, while not a renegotiation, determines whether the parties are living up to their obligations and opens up the door for the government and the company to  examine other areas of collaboration especially in local content. “It identifies what it is that is not in the contract that we can work on together  and I tink local content is one of those areas where we have made a lot of progress, including initiatives like the Centre for Local Business Development,” he said.

At the same time, he cautioned that ExxonMobil might shelve investment in developing the Payara oil field which now depends on a Guyana government review before the company gives its approval called the Final Investment Decision. “If we don’t get the agreement as we are looking for in Guyana, the investment money will go elsewhere in ExxonMobil’s portfolio,” he said.

The company also boasted that it was spending more than the US$300,000 per year that is set aside for the training of government officials.

Mr. Routledge told reporters that the US$2.5 million that the company spent on training several Guyanese in Canada is a recent example of the United States (US) oil major being committed to employing more Guyanese instead of expatriates.

“We spend far more than that,” he told a media interaction in reference to Vice President Bharrat Jagdeo’s public indication that his administration wants more than US$300,000 set aside for training Guyanese.

The coalition government had managed to increase the allocation for government training and education from US$45,000 annually to US$300,000 annually to get the necessary human resources to manage the industry. Mr. Routledge said the 24 Guyanese would be “going offshore to take  highly technical roles, to run the operations, to displace expatriates from the workforce.” Mr. Routledge pledged his company’s commitment to ensuring that as many Guyanese as possible are employed at its offshore locations, onshore.

ExxonMobil, which has problems with its gas compressor aboard the Liza Destiny Floating Production, Storage and Offloading vessel, hopes to increase its production to 120,000 barrels per day by next month.

The ExxonMobil President highlighted that the less than one-month old People’s Progressive Party Civic (PPPC)-led administration has emphasised that “they would review the contracts but that they are not seeking to renegotiate the contracts.

Exxon says it will take its money elsewhere… “If that is a threat, it will not work”

Aug 27, 2020

Source

– Govt. will continue its due diligence; we will not be rushed – Vice President Jagdeo

By Kiana Wilburg

“…Guyana is one of the better opportunities for us in the ExxonMobil portfolio (but) it is not the only one. And indeed, if we don’t get the agreement as we are looking for on Payara (the company’s third Field Development Plan), the investment money will go elsewhere in ExxonMobil’s portfolio.” Those were the words of ExxonMobil’s Country Manager, Alistair Routledge, during an online interview yesterday which Kaieteur News and other media entities were not invited to.

Vice President, Dr. Bharrat Jagdeo

Since making the comment, many local and international transparency advocates expressed concern that the American oil giant is issuing a threat to a Sovereign State while it exercises its right to review all aspects of the Payara plan. But if the company intended to send a threat to Guyana, Vice President, Dr. Bharrat Jagdeo, categorically stated that it would not work. During an invited comment with this newspaper last evening, Dr. Jagdeo stressed that the position as noted by the company will have no effect on the quality of due diligence being carried out by the government on ExxonMobil’s Payara Field Development Plan (FDP).
The Vice President said, “…The Head of ExxonMobil Guyana has spoken and I guess that he speaks on behalf or represents the interests of his shareholders but we represent the Guyanese people. And I can assure everyone that the quality of the review of the Payara FDP will not be compromised or rushed because of this position by Routledge. It will not be influenced. The government of Guyana will continue its due diligence and we will follow best practice.”
Routledge’s comments which have since attracted harsh criticisms, was made in response to queries about calls to review the Stabroek Block Production Sharing Agreement (PSA) so that Guyana could get more value for the exploitation of its oil and gas resources.
Routledge was keen to note that ExxonMobil and the Government of Guyana have had very little discussion on this front. He did note however that the PPP/C administration wants to have all the oil deals reviewed and not renegotiated. Out of respect for the sanctity of contracts, Routledge said it is important that only a review is done and not a renegotiation.

ExxonMobil’s Guyana Country Manager, Alistair Routledge

The Country Manager said, “…Internationally, contract sanctity is important to all companies. If we enter into contracts with governments and they change down the road, then it is very difficult for us to make commitments on projects that have typically 20 to 30 years investment. And how can we make those commitments if we are unsure if terms will change? So it is important for everyone to understand that sanctity is important.”
With this in mind, the official was asked to say what he believes to be the purpose of the review if not to have a renegotiation of certain provisions that would give Guyana more return. This was asked in light of the heavy criticisms over the last five years that the Stabroek Block deal is in favour of the company and not Guyana. Routledge was quick to note that he does not believe that the deal is lopsided, but rather, a representation of “aligned interests”. He said, too, that if the contract was “more challenging” for ExxonMobil “then to be honest, I don’t think in this environment, investment dollars would be coming to Guyana currently.”
The official continued, “It is a global business and especially in these days where commodity prices have fallen, the investment dollars will flow to where it is competitive. As I said in opening remarks, Guyana is one of the better portfolio opportunities for us but it is not the only one and, indeed, if we don’t get the agreement we are looking for on Payara, the investment dollars will go elsewhere in ExxonMobil’s portfolio.”
Further to this, Routledge said that there are benefits to reviewing oil deals without moving to renegotiation. In this regard, he said that both parties get an opportunity to understand what is required of each other and if those requirements are being met. He said, too, that it provides an opportunity to examine what other areas in the contract both parties can work on together to maximize value. In this regard, Routledge noted that local content is one of those areas. “While we have made a lot of progress…there is still much more that can be done,” the official concluded.

Local Content, the money maker is the person who has the power to have a great many tugs and pontoon boats to fetch supplies to the oil rigs in the ocean. Poor Guyanese do not have those contact or money. Average money ppl do not have that much money either to carry expensive stocks waiting for a year to be used up. They have to carry the stock as a supplier. Money is expensive.

I guess there is only one man in Guyana who can make demands with pockets full of money. Suh, who is local content going to benefit. As Dem bai sey, local bora and saame doan digest well in foreigners.

Energy companies are not doing well.  Exxon has been removed from the DOW after 92 years.  This company will most likely not concede to the demands of the Ali government.  If they do, the concessions given will be miniscule.  Exxon is already saying that they will try to help the Guyanese economy in other ways rather than to renegotiate the 2016 contract .  Guyana wants a higher percentage of the profits but Exxon is signaling that it would not budge.  

The Guyanese people can blame pretty-boy, Trotman.  

Both bora and saime makes excellent dishes though.

The government has to explore avenues that can shift more benefit to Guyana. They may very well end up with the terrible agreement that the Coalition signed but it would be inexcusable if they didn't try. Exxon can threaten how much they want but they still can't manufacture that crude in a factory. So they will eventually have to sit down and talk. 

@Billy Ram Balgobin posted:

The Guyanese people can blame pretty-boy, Trotman.  

The PPP Government can change that ,will they ?

Many talking heads blamed the PSA agreement between the last gov't and EXXON ,hopefully their voices are not lost.

The deal can be renegotiated especially if the last Government was illegitimate. 

The government should do what's in the best interest of the Guyanese people

Since when the PPP government did the best for the people of Guyana,  including their voters ? Their elite comes first and to hell with the ordinary citizens. 

@Django posted:

The PPP Government can change that ,will they ?

Many talking heads blamed the PSA agreement between the last gov't and EXXON ,hopefully their voices are not lost.

No they cannot. What a government signed becomes the obligation of the successor government.  I don’t see how Exxon can be forced short of proving fraud.

Exxon’s threat to take investment elsewhere shows how worried it is

Aug 28, 2020

Source

– Guyana has no reason to be afraid-Dr. Mangal

Upon noting the recent comments of ExxonMobil Guyana’s President, Alistair Routledge, to the effect that the company would take its money elsewhere if it does not get its way with the Payara Field Development Plan (FDP); Petroleum Consultant, Dr. Jan Mangal believes this just exposes how worried that company is.

Former Presidential Advisor, Dr. Jan Mangal

During a recent interview with Kaieteur News, the former Presidential Advisor stated that even if ExxonMobil wants to take its investment elsewhere, Guyana has nothing to fear.
In fact, he said that this sort of posturing is expected.
Dr. Mangal said: “If ExxonMobil were ever vulnerable to a single country, and a single block, it is now. Guyana has immense leverage over ExxonMobil since it needs Guyana much more than Guyana needs Exxon. With Exxon’s current portfolio, Exxon does not have a future without Guyana.”
The anti-corruption advocate added: “This could be a ploy between the PPP/C and Exxon where they want to make it look like the government is squeezing Exxon but then nothing really changes. Another scenario is that ExxonMobil is genuinely worried and they are coming out with this kind of threat and that is fine. This is ok. Guyana should not be scared, since ExxonMobil is supposed to jump up and down and say, “We are going elsewhere”.”
But even if this happens, Dr. Mangal said Guyana has two oil projects already streamlined, with one already producing oil since last year Christmas.
Further to this, the international consultant posited that having a third oil project under a lopsided Production Sharing Agreement is not in the nation’s interest.
The anti-corruption advocate stressed: “The third project Payara should only be approved if we get a fair, new production sharing contract for the whole Stabroek Block. Guyana should think long term about this. Remember it was only a couple years ago we did not have oil, so if we need to wait a couple more years for a better deal, then fine, Guyana can wait.”Further to this, Dr. Mangal said Guyana can focus on getting prepared for the sector and “cleaning house.”
He posited that time is always on the country’s side. In fact, Dr. Mangal said that the country can only benefit in these deals if it take time to do things properly.
In this regard, he said that Guyanese should pay attention to what happened when the last government rushed into a very bad deal. “So I completely disagree with those who say Guyana does not have leverage. That is what Exxon would like Guyana and Guyanese to believe, but it is false.”
It seems that the approval by the government for the FDP is being held up over concern for key environmental issues.
The first matter relates to flaring. ExxonMobil wants to keep the loopholes it got in its Liza One and Two permits which allowed for flaring while the other matter pertains to the dumping of toxic water in the ocean from the company’s operations.
Guyana’s Environmental Protection Agency has been opposed to allowing the multi-national to have its way on these critical issues. Since these matters have been exposed in the media, ExxonMobil declared that it could take its investments elsewhere.

That is how I see it too. Jagdeo is doing the right thing by calling Exxon's bluff. As I pointed out yesterday, while there may not be much can be done on the previous PSA it is still worth trying rather than just sitting on ones hands. But the new agreement has to be approached that puts Guyana and Guyanese first and that is what Jagdeo is intent on doing.

If Exxon takes its business elsewhere, Guyana's cark duck. They better go slow on this one.  Some people visualize problems that are not there. The revenues from oil and gas can take Guyana to great heights. 

Think of Skeldon Estate, same type of decision making. Some individuals think they are super bright, no need to listen to opinions. No one in the PPP would dare much less those of the private citizenry.

@Ramakant-P posted:

If Exxon takes its business elsewhere, Guyana's cark duck. They better go slow on this one.  Some people visualize problems that are not there. The revenues from oil and gas can take Guyana to great heights. 

Exxon has too much invested in Guyana's oil and gas so they are not going anywhere. The new sheriff is aware of what is taking place. Not like Granger who they say signed documents without reading them.

Jagdeo is doing the right thing. He cannot rewrite the PSA but he could leverage on new deals. 

With over a billion sunk cost and 8 billion proven reserves, Exxon not going anywhere. They will do a deal with the new sheriff. 

Guyana was rescued in the nick of time. 

Good thing PNC lost. 

And like the article said: “This could be a ploy between the PPP/C and Exxon where they want to make it look like the government is squeezing Exxon but then nothing really changes.

Mit,

I and I eard that the govament has been urged to get Exxon to spend money to upgrade the racing circuit they call "South Dakota".  Dem people want speed and the best place to speed is the circuit.  The Goose Neck is currently broken  

@Billy Ram Balgobin posted:

Mit,

I and I eard that the govament has been urged to get Exxon to spend money to upgrade the racing circuit they call "South Dakota".  Dem people want speed and the best place to speed is the circuit.  The Goose Neck is currently broken  

Was going to finance a racing vehicle on that raceway. On the path of locating a Datsun, have a shop in Canada soup up the engine and shipped. Once there, I am certain I would have been able to choose a driver that can handle speed.

Postponed the idea bcz a business venture was hijacked by NICIL. Still mad at dem.