Exxon says it will take its money elsewhere… “If that is a threat, it will not work” – Jagdeo

– Govt. will continue its due diligence; we will not be rushed – Vice President Jagdeo

“…Guyana is one of the better opportunities for us in the ExxonMobil portfolio (but) it is not the only one. And indeed, if we don’t get the agreement as we are looking for on Payara (the company’s third Field Development Plan), the investment money will go elsewhere in ExxonMobil’s portfolio.” Those were the words of ExxonMobil’s Country Manager, Alistair Routledge, during an online interview yesterday which Kaieteur News and other media entities were not invited to.

Vice President Bharrat Jagdeo

Since making the comment, many local and international transparency advocates expressed concern that the American oil giant is issuing a threat to a Sovereign State while it exercises its right to review all aspects of the Payara plan. But if the company intended to send a threat to Guyana, Vice President, Dr. Bharrat Jagdeo, categorically stated that it would not work. During an invited comment with this newspaper last evening, Dr. Jagdeo stressed that the position as noted by the company will have no effect on the quality of due diligence being carried out by the government on ExxonMobil’s Payara Field Development Plan (FDP).   

The Vice President said, “…The Head of ExxonMobil Guyana has spoken and I guess that he speaks on behalf or represents the interests of his shareholders but we represent the Guyanese people. And I can assure everyone that the quality of the review of the Payara FDP will not be compromised or rushed because of this position by Routledge. It will not be influenced. The government of Guyana will continue its due diligence and we will follow best practice.”

Routledge’s comments which have since attracted harsh criticisms, was made in response to queries about calls to review the Stabroek Block Production Sharing Agreement (PSA) so that Guyana could get more value for the exploitation of its oil and gas resources.

Routledge was keen to note that ExxonMobil and the Government of Guyana have had very little discussion on this front. He did note however that the PPP/C administration wants to have all the oil deals reviewed and not renegotiated. Out of respect for the sanctity of contracts, Routledge said it is important that only a review is done and not a renegotiation.

ExxonMobil’s – Alistair Routledge

The Country Manager said, “…Internationally, contract sanctity is important to all companies. If we enter into contracts with governments and they change down the road, then it is very difficult for us to make commitments on projects that have typically 20 to 30 years investment. And how can we make those commitments if we are unsure if terms will change? So it is important for everyone to understand that sanctity is important.”

With this in mind, the official was asked to say what he believes to be the purpose of the review if not to have a renegotiation of certain provisions that would give Guyana more return. This was asked in light of the heavy criticisms over the last five years that the Stabroek Block deal is in favour of the company and not Guyana. Routledge was quick to note that he does not believe that the deal is lopsided, but rather, a representation of “aligned interests”. He said, too, that if the contract was “more challenging” for ExxonMobil “then to be honest, I don’t think in this environment, investment dollars would be coming to Guyana currently.”

The official continued, “It is a global business and especially in these days where commodity prices have fallen, the investment dollars will flow to where it is competitive. As I said in opening remarks, Guyana is one of the better portfolio opportunities for us but it is not the only one and, indeed, if we don’t get the agreement we are looking for on Payara, the investment dollars will go elsewhere in ExxonMobil’s portfolio.”

Further to this, Routledge said that there are benefits to reviewing oil deals without moving to renegotiation. In this regard, he said that both parties get an opportunity to understand what is required of each other and if those requirements are being met. He said, too, that it provides an opportunity to examine what other areas in the contract both parties can work on together to maximize value. In this regard, Routledge noted that local content is one of those areas. “While we have made a lot of progress…there is still much more that can be done,” the official concluded.

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Comments

  • kamtanblog  On August 28, 2020 at 3:33 am

    A bad deal is better than “no deal” !
    Price of oil can go up or down !
    Re-negotiations with this in mind is
    essential for a “fair deal”….

    It favours exon more as oil prices will certainly
    remain low or fall further over next 2/3 decades
    as renewables expand worldwide.
    Solar wind wave et al !

    Jagdeo hidden agendas my concern.
    Will he “nationalise” or re-negotiate or
    review ?

    Exon has the $
    He who pays piper !
    My two cents
    Kamtan

    • brandli62  On August 31, 2020 at 9:51 am

      A bad deal is better than “no deal” !

      This is the key point. I am not sure whether Jagdeo would have been able to negotiated a better deal or has he presented evidence to the contrary? Fact is that the contract signed by Granger government led to unprecedented huge investments of Exxon in Guyana, which is triggering change all over the country. I cannot recall any comparable investments made by a private company in Guyana’s history. Please correct me, if I am missing something.

  • Kman  On August 28, 2020 at 9:15 am

    But which country will Exxon investment dollars flow? Guyana should tell them where to go. They are part of the CIA cabal that are spying on Venezuela.

  • Janet James  On August 28, 2020 at 10:41 am

    What about is wrong with a novation agreement?

  • Janet James  On August 28, 2020 at 10:59 am

    Exxon is not known for its integrity and fairness. They have been fined previously for misdemeanors.
    Human Rights and Sanctions Issues

    In the 1990s there were allegations that Mobil’s subsidiary in Indonesia collaborated with a brutal crackdown by that country’s army against Muslim separatists in Aceh province. In 2001 the International Labor Rights Fund filed a lawsuit against Exxon Mobil in federal court, accusing the company of complicity in human rights abuses. The case was dismissed by a federal district court in 2009 but was reinstated by an appeals court two years later.

    In 2017 the U.S. Treasury Department fined Exxon Mobil $2 million for violating sanctions imposed against Russia in connection with its actions in Ukraine.

    Anti-Competitive Practices

    In 1996 the Federal Trade Commission filed a complaint against Exxon, charging that it advertisements claiming its gasoline made engines cleaner and reduced maintenance costs were misleading. The company signed a consent order the following year.

    In 2001 a federal jury in Florida ordered Exxon to pay $500 million to 10,000 service station owners around the country who claimed that the company had overcharged them for gasoline for 12 years. The company fought the case all the way to the U.S. Supreme Court, which in 2005 ruled against Exxon, forcing it to pay an award which with interest had grown to $1.3 billion.

    Royalties and Subsidies

    In 1998 Mobil paid $45 million to resolve claims that it underpaid royalties owed to the federal government for oil produced on public and Indian land in California, the Rocky Mountain States and in the Gulf of Mexico.

    In 2000 a jury in Alabama ordered Exxon Mobil to pay $3.5 billion in damages after it found the company guilty of defrauding the state of royalty payments from natural gas wells in state waters. That verdict was overturned on technical grounds, and in 2003 a separate jury awarded the state $11.9 billion. The judge in the case later reduced the award back down to $3.5 billion.

    Like other oil companies operating in the state, Exxon was been a major recipient of subsidies in Louisiana for decades. A March 26, 1996 article in the Baton Rouge Advocate said: “Over the years, the state of Louisiana has forgiven Exxon from paying hundreds of millions of dollars in taxes.” A 1992 report called “The Great Louisiana Tax Giveaway” published by the Louisiana Coalition for Tax Justice found that Exxon’s facilities in the state (including the ones in Baton Rouge) with a combined value of $887 million had received 282 industrial property tax exemption during the 1980s. The cost to the taxpayers was estimated at $93.3 million. Exxon’s tax breaks were the fifth highest of any company in the state during the decade. Most of Exxon’s breaks were for projects that created no new permanent jobs.

    In 1994 the Coalition raised the issue of tax breaks received by the Exxon Chemical plant in Baton Rouge during the course of protests about unsafe conditions at the facility, which had resulted in several serious explosions. That same year, State Senator John Guidry introduced a resolution that would have withheld $20 million in tax breaks for expansion of the facility until a final report on the latest explosion was released. The measure failed, but the publicity caused Exxon to announce that it was postponing its request.

    In June 2000 the Louisiana Environmental Action Network (LEAN) awarded its first “Corporate Hog at the Trough” award to Exxon Mobil in connection with its Baton Rouge facility. The group said that Exxon had received $286 million in tax exemptions for its Baton Rouge plants over the past decade while creating only 95 permanent jobs. LEAN said Exxon had avoided paying $103 million in local school taxes during that period. The company declined the award.

    Exxon Mobil has continued receiving tax abatements in Louisiana, including a $16 million award to its Baton Rouge refinery in 2010.

    Catch Me If You Can: Exxon’s Complicity in Liberian

    • Kman  On August 28, 2020 at 5:34 pm

      You said a mouthful sister. We should make you oil minister. Exxon is CIA.

    • brandli62  On August 31, 2020 at 9:47 am

      Janet, thanks for summing up Exxon’s history of anti-competitive practices. The important lesson from your summary get however lost in detail. In the cases you had mentioned the rule of law prevailed. If you were working with a Chinese or Russian oil company, there would be no possibility to go court to challenge the company in case of misdoings. Try winning a law suit in Putin’s Russia or China under communist party rule…. Hence, while Exxon is not perfect, I rather have Guyana deal with a Western oil company than one from an authoritarian state. My recommendation is that Guyana should look out to improve it’s position with each new round of contract negotiations.

  • Georgy Porgy  On August 28, 2020 at 12:00 pm

    I would expect comments in this regard to come from Guyana’s President Ali not Jagdeo. What’s up with that Is it because Ali is inexperienced in this matter or is Jagdeo the “REAL” President

  • CSD Maraj  On August 28, 2020 at 12:33 pm

    Yes I fully agree with Janet James article Aug: 28- on Exxon but that is only a small in-site What about the Contract with Nigeria and Exxon.

    Gentlemen Please don’t get carried away that Exon is the only company that is available to make the deal there are numerous companies don’t forget the Shell oil company.
    Now remember Guyana has the Best Sweet Crude in the world today so now lets talk.
    Everyone wants to get their hands on it.
    Exxon has a very poor track record historically latest casualty Nigeria.
    Guyana cannot afford to fall for the same Exxon contract they made with Nigeria along with bribery and corruption.
    In Guyana it started with former President Granger and his corrupted ministers just as in Nigeria, remember seems like everyone has a short memory they were in a hurry to sign a contract with Exxon and not consulting the Guyanese people or the opposition party.
    They took the 18 Million Us bonus under the table and hide it somewhere in the the Bahamas for a rainy day. then lied for months in parliament and to the Guyanese people and not disclosing it.
    I wonder ” a rainy day” for WHO??
    This is not PPP or PNC money it belongs to Guyana and the Guyanese people
    Every Guyanese should be appalled regardless of which political party you support. These folks stole your money blatantly.

    I call it as I see it Shameful and disgraceful and all those involved must me made accountable.
    This got nothing to do with any of my political affiliation it has to do with Honesty and Integrity Amen.

    Now when Jagdeo says we need time to negotiate a better contract yes we do
    Time is on Guyana’s side we have the best sweet crude on the planet
    Exxon knows this so does Hess Oil and Shell oil.
    Guyana cannot afford to squander this opportunity.
    I hope and pray for President Irfan Ali and former President Bharat Jagdeo to get good guidance and consult the Guyanese people when a signing the new contract.
    Lets have a fair contract for all and must be negotiated in the interest of Guyanese people first. That’s how it must be done.

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