Ministry of Natural Resources responds to Kaieteur News article of January 23, 2018
GEORGETOWN, Guyana – The Ministry of Natural Resources notes the article appearing on page 9 of the January 23, 2018 edition of the Kaieteur News under the headline “Govt. pre-approves uncapped importation for ExxonMobil”.
The Ministry joins with the Government of the Cooperative Republic of Guyana in restating its position that it is proud to have released the contract with ExxonMobil for public scrutiny. The now publicly available contract confirms that Guyana stands to benefit in the most significant agreement in the history of this country and that the proceeds will allow for the social, infrastructural and economic transformation of our beloved country.
Notably, contracts under previous administrations were shielded from the public under questionable circumstances. This was done with contempt for public accountability and transparency and without regard to citizens’ right to know.
This government has departed from that dark path and is committed to public accountability, as witnessed by our aggressive pursuit of EITI inclusion.
What is regrettably apparent from the Kaieteur News article is the lack of industry specific knowledge and understanding of the basic principles of contract regimes in oil and gas.
Guyana’s agreement with ExxonMobil, Hess and CNOOC Nexen is a Production Sharing Agreement (PSA) as noted by Kaieteur News, not dissimilar to such agreements in other parts of the world and whose Production Sharing Agreements contain the same or similar incentives. The primary reason why, for example, China, Azerbaijan, Angola, Ghana and almost every country (a list will be provided) who utilise a PSA exempt Export and Import Duties on materials and equipment specific to upstream petroleum operations is that OWNERSHIP of such, the equipment and the installations built, become the property of the host government.
While reading the provisions contained in Article 21, the Ministry of Natural Resources kindly requests that Kaieteur News acquaints itself and reporters with Article 20:
Article 20 ‑ Rights to Assets and Insurance
20.1 Rights to Assets
(a) The Contractor shall have the right to use free of charge assets previously installed by the Contractor in relinquished areas which are required for its operations in the remaining portion of the Contract Area provided that in the event of re-licencing of the relinquished area, such licence shall exclude the aforesaid assets.
(b) Subject to Article 20.1 (c) upon expiry or termination of this Agreement in accordance with the provisions hereof, the Contractor shall upon notification by GGMC pursuant to Article 20.1 (d)
(i) deliver to the Minister, free of charge, in good order and condition, (fair wear and tear excepted) all installations, works, pipelines, pumps, casings, tubings, engines and other equipment, machinery or assets of a fixed or permanent nature constructed, used or employed by the Contractor or the Operator in the Contract Area;
(ii) deliver to the Minister, free of charge, any fixed assets relating to Petroleum Operations outside the Contract Area and movable assets owned by the Contractor or Operator and used or employed in connection with Petroleum Operations and located in Guyana for which costs have been fully recovered in accordance with Annex C herein; where costs have not been fully recovered the provisions of Article 20.1 (b)(iii) shall apply;
(iii) sell to the Minister any other assets owned by the Contractor or Operator and used or employed by the Contractor or Operator in the Contract Area or elsewhere in Guyana in connection with Petroleum Operations at a price equivalent to the unrecovered cost of the assets.
The Ministry of Natural Resources understands that this is a new sector for all of Guyana but especially urges the media to be responsible in their reporting and where necessary and applicable to provide relevant context. The Ministry stands ready to assist in this regard and is examining ways in which it can partner with private sector entities to provide training and exposure to media as was the appeal of the newly elected executive of the Guyana Press Association as articulated at the recent media brunch hosted by His Excellency President David Granger.