Georgetown: It is within Guyana’s sovereign right to renegotiate the controversial Production Sharing Agreement (PSA) between the country and ExxonMobil and its partners if it so chooses, according to US Ambassador to Guyana, Sarah-Ann Lynch.
“We certainly believe that Guyana is a sovereign country so that would be for Guyana to work that out with the private sector to see if there is room for renegotiation. We certainly won’t interfere with that,” Lynch said.
However, since the details of the arrangements have come out, following the oil discovery in 2015, and subsequent confirmation of several wells of over five billion barrels of oil, there has been widespread criticisms and expressions of concern. For one, several critics believe that the royalty is too low.
The oil discovered is the lighter, sweet crude, which fetches premium price on the world market. Guyana, it is being argued, should have settled for a better deal of at least 10 percent.
In addition, the 50/50 share in the profits is being viewed with deep suspicion.
ExxonMobil’s long history in the oil business has not been without controversy.
That 50/50 split of profits would only come after ExxonMobil and its two other partners have taken their expenses out. Those expenses include pre-2015 spending incurred during the initial exploration phase.
ExxonMobil itself has had a history of not playing fair, and with evidence of expenses being inflated in other countries, thus reducing profits, it has been stressed that the shiny glitter of the black gold would not be so shiny, unless Guyana hurriedly attempts to renegotiate the deal.
The US envoy said that there would be no interference from the local US embassy to facilitate a renegotiation. She said that the embassy’s main role would be to foster opportunities in the oil and gas industry; it’s coming online and its growth.
Lynch also said that the focus is on a level playing field, with an ample opportunity for growth and continuous interaction with government.
She said that she believes that there is tremendous opportunity for the country, given the gas reserves.
“The spinoffs will not only benefit the oil and gas sector, but also impact positively all the secondary, tertiary sectors and companies involved in manufacturing, tourism, agriculture, information and technology and services areas. I think there are tremendous opportunities,” she posited.
While she would not discuss the PSA with ExxonMobil subsidiary, Esso Exploration and Production Guyana Limited (EEPGL), she underscored that the bigger picture should be the vast opportunities that Guyana’s emerging oil and gas sector can bring to this nation.
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