–says will not be dictated to by Kaieteur News

OPPOSITION Leader, Aubrey Norton, has rejected Kaieteur News’ re-negotiation bandwagon and asserted that the People’s National Congress-Reform (PNC-R) will not be “dictated” to by the newspaper.

DURING a press conference on Friday, Norton, while responding to a reporter, said that he has made “numerous” comments on oil and gas; however, according to him, this is not the only issue that the Opposition has to deal with.

He said that the Production Sharing Agreement (PSA) has a mechanism for there to be engagements with ExxonMobil, in order for Guyanese to benefit.

This is in spite of the fact that the 2016 PSA that was orchestrated by APNU during its time in government while in coalition with the Alliance For Change (AFC), has been criticised by many for its shortcomings.

Moreover, Norton admitted that the PSA created by his party along with the AFC has “flaws.”

Based on the new PSA by the ruling People’s Progressive Party (PPP) Government, Guyana would receive better terms, and more benefits when compared to the contentious 2016 PSA.
Norton then went on to say: “…But there seems to be a thing where it says if you don’t join certain people in saying re-negotiate and ring fence, [you’re not] saying anything… we have to determine what is suited for the people of Guyana and what is suited for us and we have done that…”

He added that the Opposition has to be “far more careful than a newspaper.”

The PNC-R Leader said: “Now a newspaper has the right to have its interest; it could say what it wants, when it wants, how it wants, but it does not have the right to dictate what we say.”
He further purported: “The only thing we can be accused of is not saying we will re-negotiate, which we don’t intend to say…”

PPP General Secretary, Dr Bharrat Jagdeo affirmed the government’s stance on not changing Guyana’s new PSA to suit ExxonMobil’s future ventures.

During a previous news conference, he explained that the purpose of the agreement is to ensure that Guyanese fully benefit from its oil and gas resources, thus, the core terms, especially the core financial terms, are settled.

Clyde & Co International Law Firm, a company headquartered in London, England, was hired by the APNU+AFC Coalition to present an “independent” report on an investigation into the circumstances leading to the execution of the Petroleum Agreement June 27, 2016 – the renegotiated ExxonMobil contract.

Their report stated that an ExxonMobil official, Brooke Harris, drafted Guyana’s negotiating position for the new ExxonMobil deal.

It added that the Cabinet Memorandum that was approved to green-light the renegotiation with ExxonMobil was based on email correspondences and drafts exchanged between the APNU+AFC Coalition and ExxonMobil.

The report, on page 29, said: “We understand that on 25 May 2016 Mr (Brooke) Harris provided by email a first draft Cabinet Memorandum.”

Page 30 added: “We understand that the Cabinet Memorandum was prepared further to the email correspondence and draft versions exchanged between Mrs Homer and Mr (Brooke) Harris during the period 20 May to 31 May 2016.”

The fiscal terms of the PSA for the Stabroek Block have been the subject of debate and contention for some time.

There has also been considerable misinformation – some willful and intentional – around profit sharing, royalty rates, cost recovery, Guyana’s obligations, and those of the Stabroek Block co-venturers, to advance the narrative proffered by some that Guyana is getting a bad deal.

But the government, despite some of the challenges that come with a rapidly expanding oil sector and economy, has heeded the advice of experts, bi-lateral partners and consultants in and outside Guyana to create a framework to maximise the gains from production for Guyanese.

Guyana is the global leader in total offshore discoveries since 2015, with 11.2 billion barrels of oil equivalent, amounting to 18 per cent of discovered resources and 32 per cent of discovered oil, according to a 2022 report from Rystad Energy.

Under the terms of the 2016 Stabroek Block PSA, Guyana is entitled to two per cent of all pre-cost revenues as a royalty and 50 per cent of all profits with a cost recovery ceiling of 75 per cent, which is roughly average when compared to agreements with other frontier oil and gas countries international consultancy Wood Mackenzie found in a 2020 report.

The average government take, which refers to the value received by the government over the life of a licence in the form of royalties, profit sharing and taxes, will generally be around 60 per cent of profits or 14.5 per cent of overall revenues when both the pre-cost royalty and the post-cost profit sharing are accounted for and is expected to increase until 2025. Analysts predict that the country could reach US$7.5 billion annually in 2030.

The fiscal terms of the new model PSA include a 10 per cent royalty rate and 65 per cent cost recovery ceiling. The profit share will remain 50/50 between the government and the contractor, with a new corporate tax of 10 per cent.