Jagdeo backpedals on promise to renegotiate Exxon contract
Dec 21, 2024
Kaieteur News-While serving as Opposition Leader, Bharrat Jagdeo said Guyanese should be sad each time ExxonMobil makes a new oil discovery since the then administration accepted a bad deal. He even went on to commit to “renegotiate those contracts”.
However, on Thursday, Jagdeo, who has since been appointed as Vice President, said he never meant that the deal with Exxon would be renegotiated.
Vice President, Bharrat Jagdeo.
During his press conference, Kaieteur News reminded the VP of his statements, shared while he was the Leader of the Opposition, and asked him to say whether he still holds that view and why.
In his response, Jagdeo said, “Yes, so I said that and I held to the view and not only did I say that, I said that these contracts, some of the, or the contracts will be renegotiated – contracts. So, we had at that time six contracts, that is with Kaieteur, Canje block, several blocks. So, when we said we are not gonna renegotiate the Stabroek contract, and because we are already in production and we will kill the momentum.”
He went on to explain, “Remember when I was talking about this, there were six contracts outstanding so we said we will renegotiate those contracts and we’ve effectively kept our promise because we made it clear that the new fiscal regime would have to apply to all of the contracts that were outstanding then or currently outstanding, except the Stabroek Block.”
Jagdeo said his previous statement often causes confusion, since it was interpreted to mean that the Stabroek Block contract would be renegotiated. He, however, noted that government has kept its promise to “renegotiate the contracts” since the new Production Sharing Agreement (PSA) will apply to the other blocks.
“We have effectively renegotiated five of them because we made it clear that the new PSA would have to apply to all of the five that are outstanding, outside of the Stabroek Block, so Canje, Kaieteur, everything else,” he said.
Back in 2019, Jagdeo while being interviewed on 94.1 FM said, “They sold us out to the foreigners – the oil companies. Every time there is a find there, our people should be sad because nothing comes our way. We are going to renegotiate those contracts because that’s not what we had in mind. When we were in the early days, we were coaxing the people (ExxonMobil and partners) to go along. They (APNU+AFC) came into office (and met) 3 billion barrels of proven reserves and then gave up zero royalty, no taxes, no ring-fencing, no local content for these people to spend any money here.”
He continued: “Paying our people GY$72,000 a month when the foreigner is getting US$10,000. Bringing water from California to drink here. We are paying for all that. Landscaping – they wanna contract it to a company coming from abroad and the Trinidadians and others are just walking in not only in the oil sector but they are getting all the prime lands too… So that is why I got back into politics. I’m not prepared to see this happen; I have no desire to be President again.”
Although Jagdeo’s comments at the time were focused on the lopsided nature of the Exxon contract, he now claims that the statements were meant for the other oil blocks.
Currently, ExxonMobil, the operator of Guyana’s resource rich Stabroek Block is the only producer of oil in the country. It is therefore difficult to determine the effect a change in fiscal terms would have on those other blocks where production is not likely to commence any time soon.
In the meantime, government has said the Stabroek Block holds approximately 11.6 billion barrels of oil. Exxon has been given the green light for six projects to date; three are already in operation, producing over 650,000 barrels per day (bpd) currently.
Guyanese have been demanding a renegotiation of the terms of the oil contract since the deal mostly favours the contractor. For instance, Guyana receives a meagre 2% royalty, one of the lowest known across the industry. Exxon and its contractors are also exempted from paying taxes. Meanwhile, each month, the oil companies can deduct up to 75% of Guyana’s oil to recover its investments. The oil companies still benefit from the remaining 25% which is split evenly with Guyana as profits.
(Jagdeo backpedals on promise to renegotiate Exxon contract)
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