Exxon says it will take its money elsewhere… “If that is a threat, it will not work”

Exxon says it will take its money elsewhere… “If that is a threat, it will not work”

“…Guyana is one of the better opportunities for us in the ExxonMobil portfolio (but) it is not the only one. And indeed, if we don’t get the agreement as we are looking for on Payara (the company’s third Field Development Plan), the investment money will go elsewhere in ExxonMobil’s portfolio.” Those were the words of ExxonMobil’s Country Manager, Alistair Routledge, during an online interview yesterday which Kaieteur News and other media entities were not invited to.

Since making the comment, many local and international transparency advocates expressed concern that the American oil giant is issuing a threat to a Sovereign State while it exercises its right to review all aspects of the Payara plan. But if the company intended to send a threat to Guyana, Vice President, Dr. Bharrat Jagdeo, categorically stated that it would not work. During an invited comment with this newspaper last evening, Dr. Jagdeo stressed that the position as noted by the company will have no effect on the quality of due diligence being carried out by the government on ExxonMobil’s Payara Field Development Plan (FDP).

The Vice President said, “…The Head of ExxonMobil Guyana has spoken and I guess that he speaks on behalf or represents the interests of his shareholders but we represent the Guyanese people. And I can assure everyone that the quality of the review of the Payara FDP will not be compromised or rushed because of this position by Routledge. It will not be influenced. The government of Guyana will continue its due diligence and we will follow best practice.”

Routledge’s comments which have since attracted harsh criticisms, was made in response to queries about calls to review the Stabroek Block Production Sharing Agreement (PSA) so that Guyana could get more value for the exploitation of its oil and gas resources.
Routledge was keen to note that ExxonMobil and the Government of Guyana have had very little discussion on this front. He did note however that the PPP/C administration wants to have all the oil deals reviewed and not renegotiated. Out of respect for the sanctity of contracts, Routledge said it is important that only a review is done and not a renegotiation.

The Country Manager said, “…Internationally, contract sanctity is important to all companies. If we enter into contracts with governments and they change down the road, then it is very difficult for us to make commitments on projects that have typically 20 to 30 years investment. And how can we make those commitments if we are unsure if terms will change? So it is important for everyone to understand that sanctity is important.”

With this in mind, the official was asked to say what he believes to be the purpose of the review if not to have a renegotiation of certain provisions that would give Guyana more return. This was asked in light of the heavy criticisms over the last five years that the Stabroek Block deal is in favour of the company and not Guyana. Routledge was quick to note that he does not believe that the deal is lopsided, but rather, a representation of “aligned interests”. He said, too, that if the contract was “more challenging” for ExxonMobil “then to be honest, I don’t think in this environment, investment dollars would be coming to Guyana currently.”

The official continued, “It is a global business and especially in these days where commodity prices have fallen, the investment dollars will flow to where it is competitive. As I said in opening remarks, Guyana is one of the better portfolio opportunities for us but it is not the only one and, indeed, if we don’t get the agreement we are looking for on Payara, the investment dollars will go elsewhere in ExxonMobil’s portfolio.”

Further to this, Routledge said that there are benefits to reviewing oil deals without moving to renegotiation. In this regard, he said that both parties get an opportunity to understand what is required of each other and if those requirements are being met. He said, too, that it provides an opportunity to examine what other areas in the contract both parties can work on together to maximize value. In this regard, Routledge noted that local content is one of those areas. “While we have made a lot of progress…there is still much more that can be done,” the official concluded.

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