Dear Editor,
While the PPP/C government admits that the Exxon 2016 contract, which was negotiated by the APNU+AFC administration, has several flaws, it insists that it cannot re-negotiate its terms and conditions as they value the “sanctity” of contracts; does not want to undermine inventors’ confidence; and are also mindful of the “stability” clause that requires both parties to agree before any re-negotiation can be activated. In an interview with Financial Times in November 2023, Exxon’s Guyana President Alistair Routledge states: “there would be no re-negotiation of the agreement as contract sanctity is super important to inventors.”
Advocates have invoked various terms in their rationale for re-negotiation such as the Exxon contract, “lacks fairness,” it is “lopsided,” and “it is tainted with corruption.” Much has already been written in these areas but a quick comment on fairness is appropriate. “Fairness in global oil contracts is not a fixed principle, it is fluid and is shaped by leverage, negotiation dynamics, and geo-political realities.” (Professor Stanley Paul). Focus is given here to another perceived flaw, that is, “Exxon contract violates Guyana’s sovereignty.”
Sovereignty refers to a body that is duly elected or appointed that exercises control (both authority and power) over a defined geographic space. There was no significant time in Guyana’s post-independence history that sovereignty was supreme (where authority was impregnated with power). At a theoretical level, Guyana’s sovereignty has been vested by the constitution with the components of authority and power; however, at the practical level it had the authority but could not or was prevented from wielding unrestricted power.
During the period (1963-1971) of the Burnham dictatorship there was continuous American intervention into Guyana’s affairs. Guyana had no power to stop them. In 1964, the Americans in collusion with the British, removed the PPP government from office through electoral manipulation and constitutional aberration. In the 1980s, there was a dramatic downturn in Guyana’s economy. The PNC government was forced to invite the IMF which instituted several austerity measures that included devaluation of the country’s currency.
It was an external agency, the IMF that exercised substantial power over Guyana’s sovereignty. While Guyana had the authority it was bereft of the unrestricted power to challenge the imposition of the ERP conditionalities (Economic Recovery Program). These examples illustrate that the exercise of Guyana’s sovereignty at the power relations level is limited by external forces and exacerbated by the country’s compelling material and strategic needs. The point is that sovereignty is not an absolute concept, but rather it is a relative one. To argue therefore that the Exxon contract violates Guyana sovereignty’s is traveling on the wrong track.
“Guyana should focus on extracting maximum value from existing PSA rather than pursue a path that would imperil its economic stability.” (SN: 1/7/25). The PPP/C government’s strategy is exactly what Prof Paul suggests: work to increase revenues and benefits in other areas like Local Content which accounted for $1.5 (US) billion and which engages 1,100 vendors and hundreds of Guyanese workers. Likewise, extracting other benefits such as getting Exxon to provide their share of gas free to Guyana. Not to mention that the new contracts (outside the Stabroek block) are subject to improved terms and conditions.
Finally, I believe that the Exxon exploration license for the Stabroek block will expire in 2027. Subject to renewal, this may provide the government then with an opportunity to impose improved terms and conditions like those of the new oil blocks. There is a lingering skepticism however, among PPP/C supporters, that the continuous pressure to re-negotiate the Exxon contract might be a political ruse!
Sincerely,
Dr Tara Singh
