Oxford University Professor of Economics and Public Policy, Sir Paul Collier, has warned it would be disastrous for Guyana to “tear-up” its Production Sharing Agreement with US oil major ExxonMobil.
The Professor met with senior members of the Guyanese media corps on Wednesday at the Guyana Pegasus following a special one-day caucus of the South American nation’s Cabinet Counsel of Ministers for briefings from a high level delegation of world renowned oil and gas experts.
Heading the delegation, Sir Collier subsequently told the Guyanese Media, “What would be absolutely disastrous is tearing up this contract; if you tear this contract up, nobody else will come and that is the brute reality.”
The Oxford Economics and Public Policy Professor opined, “as far as I can see, you got a reasonable deal.”
He explained saying, “you tend to get with the first deal; the first company that comes in and does a deal is not as good for you as the second company that comes in (and so on.)”
Sir Paul posited this is “because the first company comes in, shows that gosh there is a lot of oil there, it is feasible and so then other companies start to get really interested and want a slice of the action and so the second deal you get will be better than the first, and the third will be better than the second.”
Asked about the scrapping of the ExxonMobil contract altogether and complete re-negotiation of terms – as some sections of the Guyanese society have been calling for – the Oxford Professor, in expanding on the disastrous nature of such a move, spoke to the importance of government’s credibility.
“Governments have to establish credibility over the contracts they sign…If the first contract you sign you tear up within a couple of years…you are dead and so the terms you will get on any other contract will be much worse…credibility is vital.”