Renegotiating oil contracts now would alter Exxon’s plans -Routledge

Weighing in on the matter, Vice President Bharrat Jagdeo said last week that while the PPP had promised to renegotiate the contract while it was in Opposition, that course of action might not be on the table still. In fact, he said the government is working to ensure that Guyanese get the best deal from future oil contracts.

Renegotiating oil contracts now would alter Exxon’s plans  -Routledge

Amid a new wave of debate over the renegotiation of the 2016 Production Sharing Agreement between Guyana and ExxonMobil and its co-ventures, the President of ExxonMobil Guyana, Alistair Routledge shares the view that any renegotiation of the contract now, will alter all of the company’s plans that were set out before signing the contract.

“All of our investments that have been made today was founded upon the agreement as it is as was agreed in 2016. So if you change the terms of agreement is alters all the previous investment decisions. We invest with a 20-30 year time horizon, its incredibly difficult to make any future decisions if you feel that the terms are constantly going to change,” the ExxonMobil country manager said in an interview released by the company.

Weighing in on the matter, Vice President Bharrat Jagdeo said last week that while the PPP had promised to renegotiate the contract while it was in Opposition, that course of action might not be on the table still. In fact, he said the government is working to ensure that Guyanese get the best deal from future oil contracts.

Civil Society groups and a number of prominent individuals have long held the view that Guyana got a bad deal and stand to lose billions of dollars if the contract is not renewed.

ExxonMobil’s cost recovery has also been a bone of contention, but Mr. Routledge said the company took a risk when it invested in Guyana,

“So if we never made an economic development, we would swallow all of the cost that went into that investment and we would never get paid back. There is never any risk for the state. In the happy situation where we do have economic development, the cost to pay back up to 75% of the gross revenue that is made but all profits are shared 50/50, in addition there is this famous 2% royalty,” Mr. Routledge explained.

The Exxon Guyana President said he noted the concern about the cost recovery and said that as more revenue come on stream, the amount that goes to cost recovery will reduce which will see more money being raked in by the state.

Guyana started oil production in 2019 and a number of new discoveries have been made since then.

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