Declaring the second Guyana International Energy Conference open this morning, President Irfaan Ali used the forum to make it clear that the Guyana Government has no interest in renegotiating the Stabroek Block Production Sharing Agreement (PSA) with ExxonMobil, despite a campaign promise to do so.

Though most of the President’s remarks focused on environment and investment, he said the issue of renegotiating the current contract seems to not be going away.

He told the large audience, which included visiting Heads of Government that although the government views the current contract as lopsided, it must be respected for several reasons—part of which is for the security of investors.

He said that the government’s decision not to renegotiate the contract is also in the best interest of the country, noting that the consequences which may come from walking away from the contract could be dire.

“Lets us say we stop production tomorrow, what is the consequence, what is the exposure—all those who have invested big and small investors, who took a loan, build apartments, new hotels going up, what is the exposure to them and what is the exposure to the financial institutions that finance investment based on investment. So what we did was to say we have something that was already signed we agree that we are going to efficiently manage it to extract a much benefit as possible,” the President said.

The President assured that all future agreements are going to be different. Already, the government has updated the Production Sharing Agreement model which would now see Guyana receiving a royalty rate of 10% instead of 2%. And while the 50-50 Profit Sharing aspect of the model will be maintained, the new model will include a corporate tax of 10% while the maximum cost oil, for any given year will be 65%.

He said the new terms and conditions are favorable to both the government and investors.

“You cannot set terms that lock out investors especially when we are going to an auction now and that is what we have put to the table,” the President noted.

Mr. Ali said that the government is also moving full ahead to develop the country’s natural gas sector.

He focused on country’s potential to not only become a regional leader in the field, but to also cater to domestic demands.

He again assured that the cost of energy will be significantly reduced in the next two years.

This year’s international energy conference will wrap on Friday and is being held under the theme: Harnessing energy for development.

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