ExxonMobil Guyana Limited (EMGL) has cautioned against comparing the terms of Suriname’s oil contract with those in Guyana’s 2016 Production Sharing Agreement (PSA) for the Stabroek Block.
Recently, it was announced that TotalEnergies made a Final Investment Decision (FID) for the GranMorgu field in Block 58, located offshore Suriname. This triggered comparisons between the contract terms for Suriname and those governing the Stabroek Block.
During a press conference on Wednesday last, EMGL’s President Alistair Routledge, warned that cherry-picking the contract terms is a distraction from the ‘bigger picture’ of attracting investment and maintaining the momentum in Guyana.
“Production sharing agreements are put together at a point in time reflecting the risk that existed and in order to try and attract investment, and I think we always need to step back and remember that this agreement has been very successful for Guyana, in attracting investment into a basin where nobody had made any discoveries,” Routledge said.
He added that Exxon’s discoveries in the Stabroek Block de-risked drilling in neighbouring Suriname. “We can always cherry pick, if somebody has higher royalty or lower royalty, pays this tax or that tax, but it’s about the total amount of revenue that’s generated out of the petroleum agreement, that’s really important to the country…” Routledge highlighted.
Moreover, when asked if Exxon’s stance on renegotiating the PSA has changed, specifically increasing the 2% royalty to about 5%, Routledge said, “No, it hasn’t changed.”
He added that stability in contract terms is essential to long-term investment. “If you start to try and change the investment basis, then it really undermines the whole premise of those investments,” he added.
Exxon’s President said that any change to the Stabroek Block PSA could jeopardize the investments the company has committed to the country. He noted that the company’s commitments span over a 30-year time frame.
Additionally, when asked about the possibility of invoking Article 32.1 of the PSA, which requires Exxon’s permission to possibly change the agreement, Routledge made it clear that the company has no intention of doing so.
“We have no interest to invoke that article, I mean, we’ve made US$55 billion worth of commitment to the country. To go back and to undermine the basis of that investment would seriously challenge any future investments,” he explained.
