No legal basis for challenge to Guyana/ExxonMobil PSA – Natural Resources Minister

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Raphael Trotman, Guyana's Minister of Natural Resources speaking in the country's Parliament chambers.

Guyana has no legal case to challenge the Production Sharing Agreement (PSA) between its Government and ExxonMobil affiliate; Esso Exploration and Production Guyana Limited (EEPGL) and partners—CNOOC-Nexen and Hess.

This was the view expressed by Guyanese Minister of Natural Resources, Raphael Trotman, when he appeared before the country’s bi-partisan Standing Parliamentary Committee with oversight of the Natural Resources sector on Friday last.

He as at the time  providing an update on the advancements made in the development of Guyana’s oil and gas sector and said that in the event of a court of arbitration, “Guyana did (does) not have a legal case to say it wants a vastly different agreement.”

Speaking on the ExxonMobil contract and calls from some sections of the society for its renegotiation, Mr. Trotman told the Committee, “…there had been no breach of the 1999 Agreement which required or demanded that it be amended or thrown out.”

He observed that the Guyanese government had already announced that it respected the sanctity of contracts and “so that agreement had not expired and the company was within its right to say they were relying on it (valid agreement) and if we, Mr. Chair…sought to challenge them, we could find ourselves in a court of arbitration.”

Mr. Trotman used the occasion to remind Committee Chairman, Odinga Lumumba of the Guyanese Peoples’ Progressive Party Civic Parliamentary Opposition, of the ongoing matter where Conoco Phillips has levied  Venezuela’s PDVSA’s assets in Curacao and Aruba, “because of the very matter of seizure of assets and that I believe is a judgment of US$2B.”

According to Mr. Trotman, “Guyana did not have a legal case to say we have to have a new and vastly different agreement.”

He told the Committee Chair and Members, “…if someone goes on your mining lands and agrees to pay 5% royalties and there is a bigger find of gold that was expected you can’t turn around and tell the person you now want 15% when you see what is out there. You made an agreement and you must honour your agreement and that is what the government of Guyana is doing.”

Apprising the Parliamentary Committee on the amended 2016 PSA with ExxonMobil and its partners, Mr. Trotman said “both parties voluntarily agreed to, as I said, make adjustments; there was not a whole new renegotiation of the contract.”

He dismissed public speculations too saying “Exxon (Mobil) did not bring a contract to Guyana, the 2012 contract used for Anadarko was the one that GGMC used for Exxon, it was not a contract that came out of some place in Houston, it was in the body of the Guyana Geology and Mines Commission.”

He said the only differences would be the signature bonus paid by ExxonMobil, Corporate Social obligations and environmental provisions, among others.

“All if not most have the same terms,” Mr. Trotman said in reference to the PSAs inked by Government and oil exploration companies, and maintained, ‘Exxon (Mobil) did not have any different terms from those of REPSOL or CGX…”