Government’s immediate focus in the oil and gas sector is on the review of ExxonMobil’s Payara project, local content, and a natural gas to shore project, President Irfaan Ali said yesterday.
In an interview via Zoom, Ali told Stabroek News that the three issues must be dealt with before a planned sectoral review, since they are all important facets of his government’s plans.
“Right now we are dealing with the Payara licence and the issue of local content. In looking at the broader and macro aspects of the oil and gas sector, we will be having review on where we are, what took place and looking at recommendations from those reviews on moving forward. Those reviews cover—I am not going to differentiate under this person or that person—those reviews cover the oil and gas sector,” Ali said.
He pointed out that the former Premier of Alberta, Alison Redford, is leading the review of the Payara project, while government has “already put the local content team [together] and is putting the team for the gas to shore project” together. “…Right now our focus is on these core areas that are critical for us,” he added.
During his presidential campaign leading up to the March 2nd general elections, Ali had said that his PPP/C government would not only undertake a review of the 2016 Production Sharing Agreement (PSA) with ExxonMobil and its partners in the Stabroek Block, but of all developments in the oil and gas sector.
While Ali had signaled a likely tougher stance on Exxon when he told this newspaper last month that the approval of the third of Exxon’s planned wells – Payara – would be put on hold for a review, his government has steered clear of expectations it will seek to change the widely condemned 2016 PSA.
ExxonMobil has told its investors and shareholders that both the last APNU+AFC government and the PPP/C when in opposition had promised to keep the contract “as is”.
The company has also balked at any renegotiation of the 2016 PSA for the Stabroek Block, underscoring contract sanctity and said that it needed the permits for the Payara project swiftly.
Some analysts have suggested that government should use the needed approval for the Payara project as leverage to push for a better contract, as when Guyana renegotiated in 2016, it was with a weak and inexperienced legal and technical team. In that renegotiation, this country was left with only a 2% royalty and other impositions which are seen as oppressive.
Ali yesterday said that he has taken an observational stance during the Payara review but noted that he is being briefed on the process.
“As it is now, that review is still ongoing and I will not want to pronounce on any aspect of that review. I took action in relation to the local content aspect of things. A technical team is working on advising me in relation to local content and what should be our approach to local content. Of course, this review would lead us into a legislative framework, so we would have to look at what is needed legislatively and what would be needed from a policy perspective, in dealing with the local content issue,” he said.
“In the wider and broader scheme of things, we said yes, there would be a review of everything in the oil and gas [sector] and that is what will commence. But what we are looking at now and putting together is a technical team for the bringing of gas onshore and to see how quickly we can move to that. That is our development outlook. So these are things that are ongoing on… I don’t want to predict what the outcome of the review will be but the review is to give us an analysis of what the technical people think of what has been done so far and what their recommendations are. Definitely when the recommendations come to the government, we will have to look at those recommendations in the wider scheme of things and let the public be aware of the set of measures of actions in relation to the review,” he added.
When Ali was asked about a timeframe for the start of the general review, he said that he could not commit as government is still unclear on the Payara findings and recommendations.
“The immediate task at hand, which has to do with the Payara licence, and the issue of local content. The issue of review, when we resolve these then we will move to the broader aspect of the oil and gas sector,” Ali said.
Further, he added, “I am not going to give you a definitive timeframe at this point, because we don’t know what the existing review will bring and what aspects will be looked at to the current review,” he added.
