Friday, September 29, 2023

Exxon’s Kaieteur, Canje blocks will comply with new PSA terms – VP Jagdeo

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As he maintained there will be no renegotiation of the Stabroek Block Production Sharing Agreement (PSA), Guyana’s Vice President, Dr. Bharrat Jagdeo has confirmed that nine other offshore blocks will be subjected to new terms which include a 10% royalty. In so doing, the official said the State has successfully renegotiated nine future oil contracts which include the ExxonMobil-operated Kaieteur and Canje blocks.

During an engagement with members of the media on March 3., the Vice President said, “We have effectively renegotiated nine of the 10 contracts by changing the terms of the PSA because they all have to now comply including Canje and all of them.”

He recalled that the new fiscal terms were released for the nation’s maiden auction that involves 14 offshore concessions.

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His response was directed at Kaieteur News Publisher, Glenn Lall who raised concerns about the need for amendments to the Stabroek Block contract. Jagdeo recalled President, Dr. Irfaan Ali’s position on the contract, that renegotiation is out of the question since the administration respects the sanctity of contracts. The Head of State had also argued that such an approach would devastate investor confidence and the nation’s economic trajectory.

Jagdeo said the government, during its time in opposition, did express its dissatisfaction with certain terms in the Stabroek Block PSA such as the absence of ringfencing provision.

But those issues aside, he said the government’s position on preserving the deal, remains unchanged. He said the government will not be led by its nose by certain groups to do otherwise.

Guyana’s new PSA is still being finalised by the Ministry of Natural Resources. Thus far, authorities have announced that a 10% royalty rate will head the new model agreement, up from the 2% granted to Exxon for the Stabroek Block. The 75% cost recovery ceiling has been lowered to 65%. The sharing of profits after cost recovery will remain 50/50 between government and the contractor. And a corporate tax of 10% will be instituted, where there was none before.

Dr. Jagdeo had explained that while the old terms granted the government a 14.5% share at the start of production, the new terms increased this to 27.5% plus corporate tax.

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