The review of the contract signed by the former People’s Progressive Party/ Civic Government with Exxon Mobil for oil exploration in Guyana’s Exclusive Economic Zone, is natural and is in keeping with the fact that the circumstances have changed since the signing of the first agreement, Finance Minister Winston Jordan said.
The Minister told the Government Information Agency (GINA) in a recent interview that a review does not necessarily have to result in a change to the terms and conditions of a contract; rather it serves to bring a greater understanding of the contract details. “A review does not mean changes but it can involve changes,” said the minister.
Minister Jordan insisted that the request for a review of the contract was government’s way of ensuring Guyana gets the best possible deal from the extraction of oil, when it begins.
“At the end of the day … you have to say whether we are doing what is best for the interest of the national population and I can tell you we are indeed doing that. A 2009 agreement or 2006 agreement or whenever the agreement was originally made, was at a time when there was no discovery of anything, now there is oil,” Minister Jordan said.
The contract was signed some 17 years ago and Minister Jordan said this is a good reason for such review. “You can review the 1999 agreement or the 2006 agreement, it is 2016, the circumstances have changed, and oil has now been found.”
In May of 2015, Exxon Mobil declared the find of substantial oil deposits in its exploratory Liza well offshore Guyana. It has since completed drilling of a second well which revealed total deposits estimated to be in excess of 1 billion barrels of oil.
The minister pointed out that it is any government’s right to seek a review of contracts when governments change. He cited that when the PPP came into power in 1992, “their first talk and probably their only talk was about all the agreements that the then People’s National Congress (PNC) government did. They were going to review all of them and they did, especially OMAI (Gold Mines Limited) and when the review was done, not only did they find that the deal was good but it was found to be a better deal than international best practices had put together and it was their right to review any one.”
He added, “You can’t get a better deal if you didn’t review. In the first place we weren’t abrogating any agreements or anything, we were just mainly asking for a review and in the spirit even Exxon agreed.”
According to the Finance Minister, the company is in the process of drilling a third well, Skipjack, approximately 19 miles from the second Well.
Meanwhile the Finance Minister said Cabinet is satisfied and has commended Minister of Natural Resources Raphael Trotman for doing a good job in negotiating the terms of the Exxon Mobil’s exploration contract.
Questioned about the sovereign wealth fund, Minister Jordan said the government is receiving much needed help from nationals and non-nationals towards its establishment.
“I believe by the end of the year we will be a good position to have a working draft I believe … we are being assisted by a number of countries and agencies -Commonwealth Secretariat, United States (of America), and Canada they are all assisting us in that particular area so we are getting some help. Concerned Guyanese have also been adding their lot in terms of offering help… I got an email from a very outstanding Guyanese who was a Rhodes Scholar and he has offered also to help us with the sovereign wealth fund. He has put down some interesting ideas and I am to get back to him on him staying on board to help us to shape that draft into something that would be acceptable to us,” the minister explained.