Vice President Dr Bharrat Jagdeo has strongly condemned attempts made by the Alliance for Change (AFC) to suggest that it is now committed to renegotiating the 2016 Production Sharing Agreement (PSA) with Esso Exploration & Production Guyana Limited and its joint venture participants Hess Guyana Exploration Limited and CNOOC Nexen Petroleum Limited.
At a press conference on Thursday, the vice president reminded that the former APNU+AFC Administration is responsible for signing the 2016 agreement, which remains one of the most lopsided contracts in the country’s history.
“They are just conveniently saying this because it’s a popular song now… you’d have the enablers like editorials in Stabroek News…giving credibility to [the AFC] and then suddenly blaming the PPP for this contract,” he revealed.
To set the record straight, Dr Jagdeo referenced the Clyde & Co. Report, commissioned under the former government, which revealed that ExxonMobil’s commercial advisor, Brooke Harris drafted the Cabinet Memorandum that was used to justify the approval of the 2016 PSA.
Such actions, the vice president highlighted misled the entire Cabinet and demonstrated the lack of independence in the negotiation process.
“Imagine Exxon prepared the Cabinet memorandum to approve their own contract. That is almost criminal,” he informed.
He also reminded the public that Nigel Hughes, former AFC Chairman, was closely linked to the deal, as his law office was listed in the contract as Exxon’s local office.
In addition, Rafael Trotman, an AFC executive, signed the 2016 agreement while serving as Minister of Natural Resources.
He reminded reporters of the several flaws in the 2016 agreement, including no ring-fencing provisions, no corporate tax, only 2 per cent royalty to the State and a secret US$18 million signing bonus, which was hidden from the public for nearly two years.
“Winston Jordan said he thought it was a gift to the government. That is their record of the 2016 agreement – [the one we are now being blamed for],” the VP said.
VP Jagdeo reiterated the steps the current administration has taken to improve governance in the oil and gas sector.
These include introducing a new model PSA for future contracts and existing contracts for blocks outside of Stabroek.
These updated terms significantly increase government take by raising the royalty rate from 2 per cent to 10 per cent; reducing the cost recovery ceiling from 75 per cent to 65 per cent, and instituting a 10 per cent corporate tax.
Additionally, a modern Local Content Law was passed, the Petroleum Activates Bill was updated and environmental permits have been strengthened.
Notably, all major contracts, audits, and related documents have been published online
The vice president criticised the AFC and its members for pretending to advocate for renegotiation, even though they were central to drafting and approving the 2016 contract.
“This was the state of the APNU+AFC government – disorganised, incompetent, duplicitous – and didn’t pay attention to anything,” he reiterated.
