Minor changes have been made to the 1999 agreement reached between the then government and ExxonMobil in the wake of the huge offshore oil discovery in 2015.
However only the “salient points” of the contract agreement between Guyana and ExxonMobil will be made public for security and other reasons, Minister of Natural Resources Raphael Trotman said on Thursday.
“In so far as full disclosure at this point in time, I think government is of the view that full disclosure would not be to the best of the national benefit or national interest,” Trotman told a media breakfast where his ministry and ExxonMobil provided updates on the nascent oil and gas sector.
“Right now we are prepared to share the salient features of the contract, it is a 50/50 production share agreement…that means that Exxon and its partners will share 50 percent between themselves and Guyana will (have) 50 percent,” he added.
The Minister said that while he was not speaking for government as to a reason why the full disclosure should not be made as yet, he will weigh in and advise President David Granger of the myriad reasons, including the security of the nation.
Guyana has pressed the United Nations for a juridical end to the border controversy with Venezuela which, over the years, has seen Caracas thwarting oil exploration efforts in this country’s waters.
This week, United Nations Secretary General Antonio Guterres appointed Norwegian diplomat, Dag Halvor Nylander as his personal representative “to try to settle the longstanding controversy” this year, failing which the matter will be referred to the International Court of Justice for final settlement.
ExxonMobil’s offshore find in 2015 is also Guyana’s first commercial oil discovery and the country is still in its ante-natal state of developing a fully equipped oil and gas sector.
Trotman reminded that the contract signed with ExxonMobil and government predates the APNU+AFC government’s ascension to office as it was signed in 1999 with the People’s Progressive Party/Civic (PPP/C) administration.
The APNU+AFC Government preserved the contract, only tweaking certain elements but continues to review it given the changes since its signing. The Minister said, “As you know we inherited the contract from the former government in 1999. Government made a decision to look at it but avoid opening the contract in its entirety for negotiations.”
“We didn’t want [it] to go abroad as Guyana is a place where it doesn’t respect the sanctity of contracts and we thought it best [to leave] what we had found. It was not altogether a bad contract… of course 1999 to the date of discovery in 2015 things would have changed,” he added.
The contract for the 6.6 million acres of the Stabroek Block is split with government and operator ExxonMobil down the middle, after cost recovery.
Esso Exploration and Production Guyana Limited is the operator and holds a 45 percent interest in the Stabroek Block. Hess Guyana Exploration Ltd. holds a 30 percent interest and CNOOC Nexen Petroleum Guyana Limited holds a 25 percent interest.
Trotman pointed out that even after cost recovery, Guyana would still have a sizeable sum to use towards its development, given the current oil prices.
‘Refinery options ’
Government and ExxonMobil and its partners will also decide what they do with their oil after cost recovery, with both sides making clear that they reserve the right to choose a refinery of their choice.
“The way the contract is written, the government has their share of the oil, we have our share of the oil, CNOOC Nexen has their share of the oil (and) Hess has its share of the oil. So there will be individual liftings, they will go to the tankers and each has the right to move that oil to wherever they want to,” ExxonMobil Country Manager Jeff Simons pointed out.
The Minister of Natural Resources informed that even as Guyana weighs the feasibility of having its own refinery, it has received proposals to refine its oil from Suriname and Trinidad and Tobago. Both countries have said their refineries are underutilised.
“They (Suriname), too, have a refinery, which is operating under par, which raises the question: Should Guyana have a refinery, spend two billion dollars on a refinery and in about twenty years, assuming that all we have is from the Liza, that in about twenty to twenty-five years we have to be looking elsewhere to (get oil) to do some refining?” Trotman questioned.
“Exxon may wish to do some of its own refining, but the Government of Guyana, under the terms of the agreement, can also determine whether it wishes to receive its portion in oil and, therefore, may wish to use the available facilities nearby- either Suriname or Trinidad, or as I said, build one here, but we haven’t come to that decision as yet,” he said.
