Min. Gaskin corrects Teixeira’s misinformation on Exxon’s PSA with the government
Minister of Business, Dominic Gaskin, today corrected Opposition Member of Parliament (MP) and Chief Whip, Gail Teixeira that her government had in fact signed a production sharing agreement (PSA) with ExxonMobil and partners in 1999.
Minister of Business, Dominic Gaskin.
Minister Gaskin made the correction after MP Teixeira was adamant that the agreement, signed under the PPP government in 1999, was “an exploration agreement” and did not cater for production.
The exchange took place at Parliament Buildings during a meeting of the Parliamentary Sectoral Committee on Foreign Affairs.
She contended that the contract signed in 1999 was, in fact, an exploration contract and not a PSA.
The feisty exchange began when Minister Gaskin said, “look at the terms of this agreement and look at the terms of what you signed (in 1999) and you will see that there is an improvement”.
This appeared to have incensed MP Teixeira who responded without hesitation.
“One is exploration versus production, don’t even go in that direction. There is a difference between an exploration versus a production. 1999 exploration, there was no thought that oil was in the ground at that time,” Teixeira charged.
“If you look at the agreement signed in 1999, it states specifically ‘this is a production sharing agreement’ and I can show you the words written in the agreement signed by President Janet Jagan,” Minister Gaskin responded as he called out Teixeira for pushing the falsehood that the 1999 agreement was not a PSA.
The minister added that the APNU/AFC government was bound by the agreement under the PPP/C government.
“We were bound by the agreement signed by your government. If you look, if you had read the agreement, you’ll see the term of that agreement [says] it expires not when you find oil, it expires after you have finished producing oil,” Minister Gaskin said.
A review of the 1999 agreement by the Department of Public Information (DPI) proves that the agreement clearly outlined that the object of the agreement “is the exploration for development and production of petroleum in the contract area”.
Chairman of the Parliamentary Sectoral Committee on Foreign Affairs, Gail Teixeira.
Article 29.1 of the agreement pointed out that prospecting and production licences were considered terminated if they were “expired” or have been “surrendered by the Contractor”.
Minister Gaskin further noted that it was this government that sought to correct the disadvantage that the former administration left the country in with the 1999 agreement.
The government undertook a review of the 1999 contract in 2016. Minister of Natural Resources, Raphael Trotman has repeatedly pointed out that the government wishes to “honour the sanctity of the agreement” signed in 1999 hence the limited modifications of the contract.
In fact, the 2016 agreement is considered a hybrid of the PSA and royalty agreements that are typical in the oil and gas industry. Under the new agreement the current administration was able to increase the annual rental fee from $240,000 per year to US$1M per year, royalty from zero percent annually to two percent annually, training fee from US$45,000 yearly to US$300,000 yearly and an additional US$300,000 yearly for social responsibility and environmental support.
Oil production is scheduled to begin in 2020 in the Stabroek Block offshore Guyana. It is estimated that Guyana will rake in some US$1M daily at the start of production earing it some US$300M annually.
ExxonMobil and its partners Hess Corporation and CNOOC Nexen, to date, have made seven discoveries in the Stabroek Block to some 3.2B oil equivalent recoverable barrels of oil.
Excerpts from the 1999 Petroleum Sharing Agreement.
Excerpts from the 1999 Petroleum Sharing Agreement.
Excerpts from the 1999 Petroleum Sharing Agreement.
Excerpts from the 1999 Petroleum Sharing Agreement.
