…Min Trotman assures best advice guided negotiations on Exxon contract
…U.S., UK, GGMC experts played lead roles

GOVERNMENT on Friday said it is satisfied with the level of negotiations done by its technical team on the revised Petroleum Agreement with Esso Exploration and Production Guyana Limited, CNOOC Nexen Guyana Limited and Hess Guyana Exploration Limited in June 2016.

Notwithstanding criticisms, subject Minister Raphael Trotman said government relied on the technical staff of the Guyana Geology and Mines Commission (GGMC), and on advice from world-renowned law firms–Jones Day of the United States and Michelet & Co. of the Kingdom of Norway, in this regard.

Government has been criticised by stakeholders for not making the 2016 agreement public soon. It was on Thursday when government during a meeting with stakeholders, released the contract. Within the contract, Guyana stands to benefit from a US$18M signing bonus which government says will be used to offset legal expenses should the United Nations send the Guyana-Venezuela border controversy to the International Court of Justice (ICJ).
Additionally, Exxon is to provide US$300,000 annually for environmental, social projects, while Guyana stands to profit from as much as US$7B over the first phase of its Liza project. This figure translates to $1.45 trillion Guyana dollars over the course of the 20-year-long, Phase One of the company’s Liza Project offshore Guyana.

In light of the benefits to be accrued, Minister Trotman made it clear that he did not take it upon himself to negotiate on behalf of the Government of Guyana, though he is a Harvard Law School-trained negotiator. “Insofar as our level of satisfaction, we are satisfied — there is no such thing as a perfect contract, [or] law. Each has to be proven. The contract that we used is the 2012 model generated after negotiations … and it was that model we built upon,” said Trotman, who noted that his government took a decision not to enter into a full-fledged negotiation for a number of reasons.

“…we used the 2012 model agreement which had been done by GGMC and we built on that and as I said before, there was no one person who sat with Exxon and tried to negotiation [sic],” he stressed, while explaining that it was government for a number of reasons previously identified, that embarked upon “marginal negotiations,” thereby making adjustments to licensing fees, and the payment for environmental support, to name a few.
Asked whether he is comfortable with the contract in light of pronouncements made by the International Monetary Fund (IMF) recently, that suggested that the Production Sharing Agreement (PSA) with ExxonMobil is generous to the investor, the Natural Resources Minister answered in the affirmative. “Yes, there is no such thing as a perfect contract. In 2013, Venezuela chased away Anadarko…Exxon is the only company that showed the capacity, the willingness and perhaps the courage to explore in our waters, so there are some concessions we needed to give,” said the minister.

Back in 2013, the Venezuelan navy entered Guyana’s waters and detained a U.S.-operated ship chartered by Texas-based Company Anadarko, which was granted a contract to look for oil in the area. Venezuela had claimed that the ship was operating illegally in its waters.
The vessel was surveying the seafloor, when a Venezuelan navy vessel forced its team to sail to Margarita Island in Venezuela. And so, Trotman stressed that it was because of the “courageous effort” of the U.S. oil company that the volume of oil and gas discovered was possible, while noting that it is difficult “or almost impossible to put a dollar value to having the presence of an international operator develop our resource.”

Feel the potential
The Natural Resources Minister said as a child he had heard stories of Guyana’s potential in the oil-and- gas sector and noted that “it is actually time that we feel that potential and hold it and this is the only company that has been brave enough to venture and partner with the government and people of Guyana and yes, we have to give them concessions.”
He embraced the comments of critics and noted that it is the job of international experts to review, criticise and make reports on such matters. In fact, Trotman disclosed that it was the government of Guyana that invited the IMF. “What Exxon enjoys, others are not going to enjoy, but it is important that we solidify ourselves with one major company and then develop other satellite relationships. It is important to this country that we don’t try to play the field,” Minister Trotman stated.

He said too that it is important to establish stable relationships, so as to develop the country’s resource and when other players enter, government will engage them “on better terms than that [sic] of Exxon.” “…But of course it is difficult to do the dollar value to the benefit of Exxon; it has already made the largest discovery in Guyana’s waters in the last 15 years than any other part…no other company has been able to do that, no other company has said they are going to stay – no other company has made an investment of US$4.5B — the largest investment that this country has ever seen in its 51 years of existence and it is the largest investment that would ever be seen in 100 years. There is a cost to that … [and] we are satisfied despite what the critics say,” The minister stated emphatically.

On November 30, Trotman along with Finance Minister Winston Jordan met with representatives of the IMF, the Guyana Revenue Authority (GRA) and other players who have been providing tremendous support to the government. “We are working with the IMF, World Bank have given us tremendous support and we are building capacity on a daily basis,” he said, while expressing gratitude to the Inter-American Development Bank, the Caribbean Development Bank and other stakeholders for providing much-needed guidance in the new and emerging sector. The minister reminded that so far for the year, Guyana has benefitted from $900M in taxes alone from exploration activities; this is apart from the contract itself.