Gov’t reaffirms new model PSA will accrue more economic benefits for Guyana; maintains 2016 Stabroek PSA will remain uncontended
The Ministry of Natural Resources wishes to reiterate that the model production sharing agreement (PSA) that is currently being developed by the Government of Guyana will garner more economic benefits for the nation and its people. The government’s position has been and will continue to be, that the 2016 PSA, shared between ExxonMobil affiliate Esso Exploration and Production Guyana Limited (EEPGL) and its partners, remains without a renegotiation as in keeping with contract sanctity. Notwithstanding this, the licencing for every new field to be developed since 2020 has seen significant improvements in both environmental and fiscal benefits for Guyana. This will continue to be the trend for all new investments in the Stabroek Block until the contract renegotiation period is reached.
The government is fully aware of the amendment made to the 2016 PSA by the former APNU+AFC government, dated April 26, 2019. The amendment saw that ExxonMobil Guyana is disallowed from recovering, through cost oil, the two per cent royalty to be paid to the nation. This modification has been implemented and enforced through the mechanisms on the payments for royalties and cost recovery conditions, and the monitoring features which set out for the governance of the cost bank regarding the projects subject to petroleum operations.
The recent reports in the media present that the 2019 amendment to the PSA sets the precedent for the renegotiation of the entire contract between Guyana and ExxonMobil. The government reiterates that the contract will remain fiscally unchanged for the country and investors’ benefits.
The model PSA being developed will be adapted for all new petroleum activities offshore Guyana – whether it be for exploration or production operations. This includes the upcoming competitive bidding round that the government intends to host in the last quarter of this year and other commercially viable discoveries that will be made in other oil blocks. The 2016 model or any previous PSA will not be applied to any other oil block where a discovery has been made.
The government is of the view, as has been underscored by His Excellency Dr Mohamed Irfaan Ali and Vice President Dr Bharrat Jagdeo, that if specific fiscal considerations are amended in the current PSA, then that could impose unfavourable effects on current and future investments in Guyana, given the current world petroleum economy.
The Government of Guyana respects the investments made by the petroleum consortium in the Stabroek Block and will continue to work assiduously, through various agencies, on every additional license and environmental permit as has been done for Payara and Yellowtail developments. These projects have shown that with the prudent management of the oil and gas sector, Guyana can garner more economic and social benefits for improved intergenerational equity of the local economy.