Guyana’s President David Granger says gov’t will continue seeking the best advice for future negotiations of oil contracts while pointing out that once international agreements are entered, there is “no question” of renegotiation.
Explaining that arrangements with ExxonMobil will be subject to “review” by the Department of Energy, he added, “but once international contracts have been engaged in, there is no question of removal or renegotiation of those contracts. We will move forward and ensure that we continue to get the best advice before we engage in any other negotiations…”
Speaking at his first press conference for 2018, the leader of the South American country stated that Government did the best that it could at the time of negotiation with ExxonMobil.
The President’s comments came in response to a question from the media about whether, in hindsight, he thought his administration should have pushed for a deal with more favourable terms to the country, especially in light of the company’s multiple discoveries of oil since the initial Liza world class discovery in 2015.
The initial agreement with ExxonMobil was signed in 1999 by the then PPP-led government and later amended in 2016 after the multi-party APNU+AFC took up office. Guyana is set to receive 2 percent royalty and 50 percent profit oil when production begins in 2020. The country also received a US$18M signing bonus when the contract was amended. Concerns have been raised that Guyana could have secured higher returns, leading to calls for a renegotiation of the deal.
“Given the circumstances at the time I think the Government did what was in the realm of possibility. I do not want to answer your question in the way you might feel it should be answered…given the situation at the time, I felt that we did the best that we could, given the circumstances,” the President said.
ExxonMobil on Friday announced its ninth discovery offshore Guyana at the Hammerhead-1 well adding to reserves that already exceed 4 billion barrels of oil.
Giving an update on checks and balances Guyana is putting in place to monitor all aspects of the oil company’s operations, including its operating costs, the President pointed out that the Commissioner General of the Guyana Revenue Authority (GRA) has been steadily building capacity to conduct comprehensive audits of pre-contract costs.
“Right now he feels that he could undertake those audits. Like other Government departments, as of 2015, we did not have the requisite personnel in place to conduct reviews or to conduct audits of such a large industry. This is happening now. He is training persons; he is recruiting people with the talent… I am convinced that he is building capacity and we will be able to conduct that audit,” the President said.
The President’s statement follows comments by Guyana’s Finance Minister Winston Jordan who told reporters in August that Guyana lacks the capacity to audit the pre-contract costs.
Jordan at the time reportedly stated that there were hardly any skills available at the time to conduct the audit.
President Granger said Government as a whole is refashioning its institutions to deal with this new industry. This is necessary since Guyana has never had such an industry and Government therefore needs time to prepare. The President assured that preparations for the industry are ongoing and are being done methodically, systematically and properly.