Monday, September 26, 2022

City Chamber will continue to advocate for sanctity of contract – President

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President of the Georgetown Chamber of Commerce and Industry (GCCI), Timothy Tucker, said in relation to the 2016 Stabroek Block Production Sharing Agreement (PSA), that the organisation’s code of conduct requires adherence to contract sanctity.

“There’s no changing of that,” he said. “I can’t change that; the next President can’t change that. That is the position of the organisation because that is the code of conduct of the organisation. That is also a model code of conduct for chambers of commerce around the world… So, at the end of the day, as much as an individual or all of us in the room would like to see something different, the organisation here has a position, and it will be maintained.”

Tucker was at the time speaking during a seminar last Thursday held by OilNOW and the GCCI with the Senior Vice President and Head of Latin America and the Caribbean for Rystad Energy, Schreiner Parker. That seminar was titled ‘Guyana Upstream: Industry and Country Benchmarking Update.’

Parker too believes in the importance of contract sanctity to current and future investments.

“I think, if you were to try and renegotiate Stabroek, you put those high resource volumes in jeopardy. And it may not be that you put them in jeopardy of ever being developed, but there’s certainly a time component that you put in jeopardy. I think time is extremely important when we’re talking about the energy transition,” the Senior VP explained during the seminar.

He went on to add that if renegotiation goes the wrong way, investors may walk away from Guyana, leaving the country’s natural resources stranded. Contract sanctity would also be particularly critical to investors looking to invest in Guyana’s upcoming offshore bid round. If Guyana were to break contract sanctity with ExxonMobil and its partners, the Rystad Energy official pointed out that investors may have doubts about bringing their money to Guyana for this and other projects.

The conversation of renegotiating the 2016 Stabroek Block PSA is one that has been in the news for several years. Some members of civil society and non-governmental organisations have argued that the agreement is unfair to Guyana. A review of the fiscal terms show  the country’s take from oil production is larger than Exxon, CNOOC and Hess’. Analysts have also said the agreement falls in the middle when compared to several other countries, with Rystad Energy even saying it is on the higher end.

The Guyana government has said though it would like a deal more favourable to the country, it respects the sanctity of contracts. It has assured the public of a model PSA it will introduce for the deepwater auction later this year, which will feature terms that secure an even higher government take. To get more value for Guyana, a national oil company (NOC) may even be established, authorities have said.

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