People’s Progressive Party (PPP) General Secretary, Bharrat Jagdeo, wants unfavourable oil contracts renegotiated, but consistently refuses to renegotiate the one contract that at this juncture promises to make Guyana money. That contract is the Production Sharing Agreement (PSA) that governs operations on the Stabroek Block.
PPP General Secretary, Bharrat Jagdeo
During a press conference on Thursday last, Jagdeo criticised with much fervency the APNU/AFC Government for not renegotiating “some” of the oil contracts which have been pointed out as lopsided by a myriad of critics.
He used this Government’s refusal to renegotiate oil contracts as reason to prop up his assertion that it is incompetent and incapable of properly managing the sector, even going so far as to say that President David Granger’s promise that the oil wealth will trickle down to the working people is not one that would be kept.
The Opposition Leader pointed to the PPP as a group that would manage the oil sector well if it is elected to Government on March 2, 2020. He has said that it would look to revisit lopsided oil contracts – all except for the Stabroek PSA with ExxonMobil and its partners, that is.
He had, for instance, noted the Orinduik PSA as a contract that he is interested in revisiting when it was pointed out that Guyana will effectively be getting no royalty for operations done on that block. Tullow Oil and its partners had boasted that the contract allows them to pay the meagre one per cent royalty with one hand, and take it back with another.
Yet, the consequentiality of that matter pales in comparison to the Stabroek PSA, as the Stabroek Block is already a-go for production. Liza-1 and Liza-2 have already been approved and First Oil could be on Guyana by next month. For the Orinduik Block, on the other hand, two discoveries have been made, but Tullow has announced that the “heavy oil” found there is causing the contractors to reassess just how commercially viable production would be for them.
So, despite the fact that other contracts may be lopsided, too, the Stabroek PSA is the one that has caught flack since its release to the public. The Stabroek PSA, which governs operations for 14 significant discoveries there, has been criticised for its extremely low royalty at industry standards, its daunting lack of ring-fencing provisions, its gaping loopholes which could lose Guyana billions of US dollars in revenue, and many more issues. Some of the provisions in the Stabroek PSA have even been determined to be illegal by some and will be facing a judicial review at the behest of Activist, Ramon Gaskin.
Despite all of that, Jagdeo has singled out the Stabroek PSA as the one contract which his government will not touch, as he has said that Guyana could still claw back value with it as is. Why this contract is Jagdeo’s sacred cow is unclear.