Hess Corporation’s Chief Executive Officer (CEO), John Hess has assured shareholders that the Guyana government will not be swayed by calls for a change of terms in the Stabroek Block Production Sharing Agreement (PSA).
During a recent energy conference, Hess said the priority for the South American country is to accelerate the growth of its economy.
The CEO said, “I think it is important for everyone to know that the Vice President [Dr. Bharrat Jagdeo] and [President, Dr. Mohamed Irfaan] Ali are very pro-business. They have been very clear to us that they want us to develop their resources as fast as possible to turn that oil resource into financial resources so they can develop their economy and have a better standard of living for the Guyanese people.”
The Stabroek Block PSA has been the subject of great criticism since its release on December 28, 2017. Industry stakeholders have called for there to be a higher royalty than the current 2% in place and changes to the tax regime.
“It is important for you to know that we have been reassured that the contract will remain untouched,” Hess said.
Though Guyanese authorities have expressed its own dissatisfaction with the fiscal terms, it has emphatically stated that the agreement will remain in place given its respect for the sanctity of contracts. It has also said that changing the terms of agreements following every presidential election does not bode well for investor confidence in the country.
While the PSA will be preserved, government has noted that nine other agreements have been renegotiated with new terms outlined for the country’s first bid round. Government has said those new terms, which include a 10% royalty, will be imposed on the ExxonMobil-operated Kaieteur and Canje blocks.