GUYANA: OIL: “Wishful thinking” that Payara could be leveraged to renegotiate Stabroek deal – Jagdeo

VP Dr. Bharrat Jagdeo

Vice President, Dr. Bharrat Jagdeo yesterday said that it is wishful thinking to assume that the Payara development permit could have been leveraged to demand a better Production Sharing Agreement (PSA) from ExxonMobil.

The politician delivered his latest rebuke of calls to get a better deal during a press conference at the Arthur Chung Conference Centre. The 2016 deal signed for Exxon’s operations in the Stabroek Block by former Minister of Natural Resources, Raphael Trotman has been widely condemned for a string of poor provisions, including a paltry two percent royalty share. The People’s Progressive Party Civic (PPP/C), which took office in August, has criticised, but refuses to renegotiate, the deal.     

“There is a group,” Jagdeo said, “that believes we should have held up Payara and not issue the licence, and use it as leverage to change the production [sharing] agreement. And it’s wishful thinking, frankly speaking. It’s wishful thinking that you could have done that now.”

The Vice President reported speaking to experts whose assessments of the market are very different from the comments being made by persons like former Petroleum Advisor to the Government, Dr. Jan Mangal. There is a large group of people, he said, who believe that calls for renegotiation cannot be substantiated because of the effect the COVID-19 pandemic has had on the oil industry. He said many companies are losing value, and that means their ability to raise money is also diminished. In this regard, Dr. Jagdeo pointed to the US$9B development cost Exxon claims Payara will need, and said that Guyana cannot raise that much money on its own.

“That’s twice the size of our total economy [which is just over US$4B] on this one investment.” Dr. Jagdeo said.

He alluded to divestments of assets by oil companies in other part of the world, noting that Guyana is privileged. The VP also worried that the growth of the global renewable energy industry could one day hurt oil prices, which he asserted made it necessary to approve the Payara project quickly.
“There is a short window of opportunity,” he said, “the renewables are yapping at people’s feet.”

He noted that Exxon is here because of the low breakeven price to produce Guyana’s oil and the fiscal conditions, and that it is important to ensure that the investment moves forward.

“We made it clear,” Jagdeo said, “that the production [sharing] agreement was signed already and that Exxon, when it comes to future agreements that will happen when they start developing the Canje Block and the Kaieteur Block, that those agreements are going to be very dissimilar to the one that they signed for the Stabroek Block… The conditions of those agreements will be established when we work out what a model production [sharing] agreement for the future will be. So that is when, for future developments outside of the Stabroek Block, the terms will change substantively. That is clear.”

( See below…. Leader of the Opposition, Joseph Harmon yesterday said that he would gather information held by the Coalition on all owners of the Kaieteur and Canje Blocks, which were signed away by the Donald Ramotar administration under questionable circumstances.)

He said, however, that the government is undertaking a “review” of the agreement, and that a team is expected to report to him on ways that the government could claw back value from various provisions in the agreement. For instance, he has indicated that the administration wants Exxon to dedicate more funding for training locals than is stipulated by the agreement. In this regard, he said that the government believes it can get more value without “renegotiating” the contract.

The Vice President took the opportunity to respond to Mangal, who is a major critic of the government’s handling of the sector. Mangal and lawyer, Melinda Janki had both advised that Guyana should take all the time it needs to review Payara. Dr. Mangal very specifically advocated for Payara to be used as leverage for a better deal. Jagdeo wondered about the petroleum expert’s advocacy for renegotiation when he advised the David Granger administration, even suggesting that the consultant should have resigned from his advisory post when he realized what the Granger administration had done with the Stabroek Block deal.

He criticised Mangal’s approach to giving advice in the press, and opined that the good governance advocate tends to disparage and brand as corrupt people he doesn’t know anything about. The VP said that he doesn’t have a problem with Mangal and that if he has technical expertise, then his expertise should be put to use but that “it’s the lecturing” that does not sit well with him.

Opposition Leader Harmon commits to providing info on Kaieteur, Canje Blocks

Leader of the Opposition, Joseph Harmon yesterday said that he would gather information held by the Coalition on all owners of the Kaieteur and Canje Blocks, which were signed away, days before the 2015 General Elections, by the Donald Ramotar administration under questionable circumstances.

Opposition Leader, Joseph Harmon

During a virtual press conference, Harmon said that he has some information on the matter, when asked whether he knows of all the beneficial owners. However, he did not want to put out information into the public, which was unverified, as he said this is information he received from someone overseas who reached out to him.

Kaieteur News reminded that, in addition to information from outside sources, the Coalition should have already been in possession of such information while in Government. This is because, every time stakes were transferred in the two blocks, the government is responsible for approving the transfer. In this regard, when signing deals, the government has to know the hands the stakes are leaving, and the hands to which they will go.

Harmon yesterday committed to passing on the question to the Member of Parliament with responsibility for natural resources to see how they may assist. Subsequently, he explained, information may be shared in an upcoming oil and gas press conference to be held by the Coalition.
“We will have a specific press conference on oil and gas,” he said, “and at that time, the question will be answered once it is posed.”

The Kaieteur Block was initially split 50/50 by Ratio Energy and Ratio Guyana (owned by the Israeli company, Ratio Petroleum) on April 28th, 2015. As of today, the Kaieteur Block is split between four companies: ExxonMobil (35 percent), Ratio Guyana (25 percent), Cataleya (25 percent) and Hess (15 percent).
The Canje Block was awarded to Mid Atlantic on March 4, 2015. Currently, four companies have stakes in the Canje Block: ExxonMobil (35 percent), Total (35 percent), JHI Associates (17.5 percent) and Mid-Atlantic (12.5 percent).
Notably, it’s not just the blocks that changed hands but some of the companies which owned stakes in the blocks. For instance, in February of 2017, Ratio Energy was sold to a company named Cataleya, run by two miners, Canadian Mike Cawood and the Guyanese, Ryan Pereira. This process has even less oversight from government.

The State Assets Recovery Agency (SARA) had started an investigation into the suspicious awards of the Kaieteur and Canje blocks in 2018. Nothing has come from that investigation.

The Opposition Leader said that it will be important moving forward to scrutinize all activities in the oil sector, as it is the people’s “national patrimony.” He urged the media, in particular, to be persistent in its scrutiny of the sector, and urged citizens to share information with the press and the Opposition.
“It is public scrutiny that will tend to keep the actors in an honest place.” Harmon said.

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Comments

  • kamtanblog  On October 4, 2020 at 5:12 am

    Simple Simon says
    Politricks are clouding the issues.
    Market forces will determine future oil
    prices. Opec has failed to buck market by
    using over/under production !
    Decline in demand for oil over next decades
    will diminish as demand for renewables increases. As winter approaches demands
    will increase but will prices follow.
    Am no oil guru so will not speculate here.

    A lot can change after 3rd November which
    results we all await anxiously …
    Decisions today will affect us all tommorrow.
    Not holding my breadth.

  • Jo  On October 4, 2020 at 11:00 am

    A pox on all their houses.

  • Georgy Porgy  On October 4, 2020 at 12:46 pm

    I’ll tell you what is WISHFUL THINKING Jagdeo….It’s .that you would change your lying, criminal, racist, evil ways.

  • Dennis Albert  On October 4, 2020 at 2:25 pm

    Oil and greed don’t mix.
    Unlike the starving people in Nigeria, Angola or Equatorial Guinea where the population is forced at gunpoint to stay silent, Jagdeo should be cautious of emulating any form of dictatorship.
    The people are angry that the oil money is already being used to support one group of people while criminalising the rest who demand their fair share.

    • the only  On October 4, 2020 at 4:50 pm

      Please dont give them any ideas,the people have enough problems already

      • Gloria  On October 5, 2020 at 10:04 pm

        I doubt that these angry people need any encouragement. They’ve simply had enough!

      • kamtanblog  On October 6, 2020 at 2:00 am

        Agree !
        Fed up of BS on information sources…
        MSM social media et al

        Me too

        Lamtan

    • Dennis Albert  On October 7, 2020 at 11:58 pm

      Jagdeo and his cohorts begged America to spread democracy, and if they act totalitarian it will make America and that devil Lily Chatterjee look like hypocrites. They expelled Granger and they did this for democracy.

  • Jim  On October 7, 2020 at 12:17 am

    Let’s focus on the vast potential of the remaining blocks. The Pomerron block might contain 15 billion barrels of sweet, light crude oil. The statistics of the USGS twenty years ago is underestimated.
    If I had the capital, I would explore for oil at the seashores of Berbice and in Pomeroon. I might find some oil.

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