WHILE there continues to be a barrage of criticism directed towards Government over the 2016 Petroleum Agreement with ExxonMobil and its joint venture partners, HESS and CNOOC Nexen, some of the writings are misguided and ill-informed at best, and misleading and mischievous at worst.

Some of the constant letters, columns and comments are clearly designed to paint the agreement in a negative light, notwithstanding the particular set of circumstances in which Guyana found itself at the time of the signing of the agreement and which remains extant.

Recent articles in the media have suggested that ExxonMobil and its joint venture partners, HESS and CNOOC Nexen will begin production at their own “whims” and that the Government of the Cooperative Republic of Guyana has no say in the matter.

ExxonMobil and its joint venture partners have stated that they will commence production in March 2020.

However, a source close to the Ministry of Natural Resources pointed out that Form B, which is the application form for the grant of a Petroleum Licence, makes clear that it is the Government of Guyana that determines when production is approved to take place.

Form B can be found in the schedule of the Regulations made under the Petroleum (Exploration and Production) Act.

Criterion 10 (e) of Form B states that the Application shall be accompanied by a fee of US$5,500 and the following documents –
(e) proposed programme of production and processing operations which shall include the date by which the applicant intends to commence production.

Some persons writing in the media have misguidedly stated that the negotiators of the ExxonMobil Petroleum Agreement neglected to include a production timeline in the agreement and that the production date seems to be solely at Exxon’s discretion.

However, the production timeline is not at the discretion of ExxonMobil, but would have been included in FORM B of the Production Licence Application that the Contractor submitted for Government’s approval after a review and approval of the Development Plan for that area.

The Ministry source said that there seems to be a misguided belief that a Petroleum Agreement must have all of the conditions and timelines for all aspects of the petroleum production written into it for it to be considered perfect.

This is not so, according to the source, who said that while the Petroleum Agreement is for an entire block, the Production Licence will be for the individual fields or wells and each will be governed by a disparate set of criteria for which a different work programme must be submitted.

“The production date is not solely at ExxonMobil’s discretion, but is approved by the [Government] once the Production Licence application is accepted and approved. With each discovery ExxonMobil makes offshore Guyana, they are obligated by contract to submit a Field Development Plan for approval according to Article 8 of the agreement and according to section of the Act before a production licence will be issued in accordance with the laws of Guyana,” said the source.

The Ministry source concluded by saying that while some jurisdictions do include production timelines in the Petroleum Agreements, it is also best industry practice for this timeline to be included in other binding documents, such as the Production Licence, and the Field Development Plan that gives effect to the Petroleum Agreement.