Jagdeo seems to be forgetting
Kaieteur News – In October 2019, it was reported that the Leader of the Opposition, now Vice President of Guyana, Dr. Bharrat Jagdeo, recommends that no further concessions be given to oil companies until the Guyana model Production Sharing Agreement (PSA) is completed. The reason for taking this view was because the contract with Exxon set a precedent for how contracts are made with other companies.
Just over a year after saying that, Exxon’s contract sets a precedent. It now says any new contracts would have to be on better terms than those for the Stabroek block. Surely he should not know that if Exxon’s contract set a precedent, then it will be very difficult for any PPP / C government to insist on more favorable terms than Exxon and its partners had for the Stabroek block.
Setting a precedent means that Exxon’s contract has become the benchmark for other oil companies to negotiate with the government. They will not insist on less favorable conditions. Is this not what it means to set a precedent?
Why then should anyone take seriously the idea that the PPP / C will be able to draw better terms for other oil blocks? He certainly did a terrible job with the Payara license.
Jagdeo also acknowledged on October 2019 that any government has the power to review any oil contract when it meets the production phase. He then said, “If this government found a reason to renegotiate the Exxon contract and make it even more profitable than in 1999, there must be a reason why we could review all the contracts examine that published when. we’re coming to the production stage because now we have five billion barrels of proven oil out there. ”
The PPP / C had a golden opportunity to renegotiate the Stabroek contract when the oil companies approached the PPP / C government for approval of the Payaya Development Plan. The PPP / C had the opportunity to demand better terms then because Exxon was banking on that approval. However, the government pressed that opportunity. He took the opportunity to claw back more concessions from the oil companies. The PPP / C withdrew from Jagdeo’s stated view that the government has a basis for reviewing all audit contracts when it comes to production.
The new model Production Sharing Agreement, which the PPP / C is developing, is of academic importance only. The Canje and Kaieteur oil blocks are not likely to be subject to that model production sharing agreement because Exxon has already started buying into those blocks. And Exxon already has a production sharing agreement, which does not restrict its operations to any one block.
All the talk is therefore about new discussions when the PSA model is developed into hot air. The oil blocks have been distributed and those individuals, who have landed their hands, are most likely to get the oil companies, with existing PSAs, to buy into the oil blocks. That is, these oil blocks are going to become the subject of speculation.
According to a news report, Jagdeo also suggests that the oil companies rent property rather than construction. This may be his way of trying to promote local content. But he seems to have forgotten among the costs, which are recoverable, are those relating to rents. In fact, if the oil companies rent property, taxpayers will eventually pay the rent to wealthy landlords.
But Jagdeo also seems to have forgotten that Guyana does not have a foreign land ownership law, which would prohibit foreign companies from buying property in Guyana. She was Finance Minister when, as part of her investment policies and laws, the country had the opportunity to seek to ban foreign property ownership.
Over the past five years, foreign companies have entered Guyana’s real estate market. The Trinidadians are known to scout for property. Foreign-owned medical schools have acquired property. Under the PPP / C itself, lands were given to foreign companies, who were not asked to go for rent by property owners.
Jagdeo cannot pick and choose when it comes to ownership of foreign property. His government either passes an act to ban foreign land ownership or allow the current liberal system to continue. He has to make up his mind.
(The views expressed in this article are those of the author and do not necessarily reflect the views of this newspaper.)