Even though various unbiased analysts have encouraged the country to do so in its best interest, the Government of Guyana (GoG) has refused to go back on renegotiating the terms of the unjust agreement made with an oil company, ExxonMobil, to achieve greater advantages for Guyanese.
The administration can utilize its authority to enact certain clauses that would boost the nation’s earnings in addition to amending the Stabroek Block deal. To guarantee that each oil-producing field pays for itself, these measures include putting in place a ring-fencing provision and restricting the interest rates on loans taken out by the developer to extract the resources. ExxonMobil may be subject to national tax rules at the government’s discretion in order to further establish its power. The Guyana Revenue Authority (GRA) has already waived hundreds of millions of dollars worth of tax concessions for the globally renowned oil company. As additional projects enter the market, the tax agency has already warned that this yearly amount will skyrocket.
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The government claimed that it is currently developing a new plan to guarantee Guyanese households profit from “business” in the oil industry rather than handling these efforts in the Stabroek Block, where more than 400,000 barrels of oil per day—on average—are being produced.
During a recent live speech, President Irfaan Ali said that the Cabinet had been working long hours to create a model that would guarantee that families all throughout the nation were engaged in the petroleum industry.
President Irfaan remarked, “Every night, we spend hours debating, discussing ideas, trying to figure out a model through which we can have every Guyanese family involved in some aspect of the business of oil and gas; creating and working on a model that would give Guyanese a holding in some aspect of this business.”
He noted his concerns about the nation’s best interest and how the governing body can capitalize on Guyana’s economical potential to make the country better by stating, “That is what we worry about, that is what I spend my time (doing) and this government spends its time thinking about – advancing policies and ideas, understanding problems, analyzing global context and positioning Guyana as I said before to be among the top countries, if not the top country on food security, energy security, and climate security.”
President Ali continued by saying that Guyana, which is widely recognized for the wealth of its families, must always be brought up in discussions about climate change and the environment in the year 2030 and beyond, “There must be no conversation about energy security without Guyana being mentioned and the conversation of Guyana must be one in which the people are respected for their unity in which every family can have prosperity, one in which our people can enjoy the best possible health care and education.”
The government has made it apparent that ExxonMobil won’t be hired to pursue larger advantages from the Stabroek Block, despite its current efforts to guarantee Guyanese benefit from local content prospects.
The oil firm had only uncovered 1.1 billion barrels of oil in the Stabroek Block when the deal with Exxon and its partners was struck in 2016 by the former A Partnership for National Unity + Alliance for Change (APNU+AFC) Coalition administration. Six years later, a significant rise of over 10 billion more barrels had been found in the nation’s Exclusive Economic Zone, a finding that some claim justifies the necessity for a revision of the contract.
Dr. Vincent Adams, the former executive director of the Environmental Protection Agency (EPA), brought attention to this particular finding for the first time ever back in September 2022.
Dr. Adams informed viewers during a GlobeSpan 24-7 online interview that although the government has turned its back on maximizing the value of its resources, Guyana has not only discovered more riches since the deal was signed but that exploratory efforts are still underway.
The former head of the Environmental Protection Agency is not persuaded that the political justification for not renegotiating the Exxon contract is genuine. In fact, the expert who has worked in the oil and gas sector for a long time is hopeful that Guyana can get a decent bargain now that it has found 10 billion more barrels of oil in the Stabroek Block, where Esso Exploration and Production Guyana Limited (EEPGL), also known as ExxonMobil Guyana, is operating. According to him, contracts are frequently modified in nations all over the world as a result of environmental changes.
He stated, “I have spent 30 years at the highest level of the US government and I negotiated (and) I evaluated contracts. That was part of my life and as a matter of fact, that was a main part of my life, and I’m talking about the Exxons of the world. I have seen many contracts you can think about and changes are expected and the one thing that you always have a justification for changing a contract is when there is a major change.”
The arrangement that the previous administration agreed to was to be reviewed and renegotiated, but the People’s Progressive Party (PPP) government has now determined that it must uphold the contract.
Considering that Guyana only receives a two percent royalty for the resource extracted and that Exxon agreed to split the profits fifty-fifty after deducting its costs from the proceeds, the citizens of Guyana think that the current deal solely benefits the oil firm.
The agreement, which the oil corporation frequently boasts about to its shareholders, also obligates Guyanese to pay their fair share of taxes, which total millions of US dollars annually. As further surgeries begin, this amount will probably increase even higher.
Additionally, Guyana is taking on the risk by permitting ExxonMobil to operate offshore without complete liability protection in the case of an oil disaster. Ring-fencing provisions, which would prevent the oil corporation from using petroleum earnings from one field to pay for costs in another, are a crucial clause that is missing from the treaty.
