In a recent interview with the BBC’s Gideon Long, Guyana’s President Dr. Mohamed Irfaan Ali reaffirmed his government’s position of upholding the Stabroek Block Production Sharing Agreement even as calls persist for the renegotiation of the 2016 deal with ExxonMobil (operator), Hess and CNOOC.
The PSA has long been a topic of contention, with critics arguing that it favours Exxon and its partners. They have taken issue with the fiscal terms of the contract, including the 2% royalty, 75% cost recovery ceiling, and the 50/50 profit split. Having inherited the management of the contract when it assumed government, and the weight of sustained criticisms, President Ali’s government remains steadfast in its stance that the contract will not be altered.
In a candid statement to the BBC, President Ali said, “The deal could have been better for Guyana. Exxon had a good deal signed by the last government but, look, for us, the sanctity of contract is very important. We cannot go back and renegotiate.”
The President’s commitment to preserving the sanctity of contracts has been a central pillar of his administration’s approach to governance. And it can be viewed as a broader principle that stability and trust in contractual agreements are vital for attracting foreign investments and fostering economic growth.
That point has been made time and time again. Timothy Tucker, former President of Guyana’s largest business body – the Georgetown Chamber of Commerce and Industry (GCCI) had pointed out that arbitrary decisions to change the nature of a deal after it’s been agreed to by all parties is bad for business and the country’s image. The businessman said that going back on one’s word in such a manner is akin to having a “low-life mentality”. President Ali, when he last addressed the issue had said: “Don’t ask me the question a hundred times. We understand that we’re obligated to act in good faith in honouring it.”
Notwithstanding the criticisms, the 2016 Stabroek Block contract, which granted Exxon access to vast offshore oil reserves, has propelled Guyana into the global spotlight as an emerging oil-producing nation.