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By Mark DaCosta- The People’s Progressive Party/Civic (PPP/C) during the 2020 General and Regional Elections campaign on a promise should they be elected they will renegotiated the ExxonMobil contract. In opposition the PPP/C spent a lot of time berating the A Partnership of National Unity and Alliance for Change for the contract they signed with the oil giant. Three year plus in Government the PPP/C has failed to keep its promise.
Guyana’s production has averaged 385,000 barrels a day this year, roughly 100,000 higher than last year, and output is on track to average 600,000 barrels a day for the month of December, after a new stream of crude was brought online earlier this year at the Payara offshore oil development, according to Kpler’s lead oil analyst Matt Smith. The analyst said he predicts Guyana’s production topping 1 million barrels a day in the years ahead.
Guyana’s emergence as an oil-producing nation some eight years ago has brought economic prospects. More importantly, it had raised hopes for a better life in the minds of Guyanese. So far, those hopes have not materialised at all, in fact, those hopes have been decisively crushed. Concerns, and worry loom over the fairness of the contract with ExxonMobil. Critics and experts rightfully argue that the current agreement is lopsided, placing the country at a disadvantage.
Regardless of the ridiculous position taken by the People’s Progressive Party (PPP) regime, and championed – not surprisingly by Vice President Bharat Jagdeo – the contractual arrangements between Guyana and the giant oil company must be renegotiated in the interest of all Guyanese. After All, neither Bharat Jagdeo, nor the PPP own Guyana, nor its natural resources. And one clique of people in Freedom House, their families, friends, and cronies should certainly not be the sole beneficiaries of Guyana’s wealth.
The terms of Guyana’s oil contract have been criticised for favoring multinational corporations over the interests of Guyana. Dr. Sarah Thompson, an energy policy expert, states, “The current contract disproportionately benefits foreign entities, undermining Guyana’s ability to maximise its oil wealth for sustainable development.”
A comparative analysis reveals that Guyana’s contract terms lag behind those of countries with more favorable agreements. Norway and Ghana, for instance, have implemented stringent clauses ensuring a higher share of oil revenue for the state. Professor James Marshall, an international relations scholar at the University of Liverpool, notes, “Guyana can learn from these examples to renegotiate terms that better reflect its national interests.”
Given the disparity in current terms, there is an overwhelmingly compelling case for the renegotiation of the oil contract. Dr. Carlos Rodriguez, an international law expert, emphasises, “Contracts should evolve with changing circumstances, especially when the economic landscape undergoes significant shifts.”
Advocates argue that ring-fencing, a practice separating the fiscal terms of different oil blocks, is essential for ensuring fair and equitable distribution of benefits. This prevents the potential exploitation of more lucrative blocks at the expense of others. Professor Sophia Lewis, a petroleum economist, asserts, “Ringfencing enhances transparency and prevents the concentration of benefits in specific regions.” Sadly, the PPP regime appears to be against the idea. Unfortunately, this may not be surprising considering Guyana’s culture of political corruption.
While the sanctity of contracts is considered by some analysts to be a foundational principle, it must not be allowed to supersede the pursuit of fairness and equity. Professor Michael Carter, a legal scholar, states, “Contracts should serve as instruments of justice, and if a contract proves to be manifestly unjust, it warrants reevaluation in light of broader societal interests.”
Concerns about the “resource curse” phenomenon, where oil wealth fails to translate into broader development, underscore the urgency for a fairer contract. Dr. Angela Harper, an economist specialising in resource governance, explains, “Negotiating fair terms is crucial to avoid the pitfalls of the resource curse and ensure sustainable development.” The term resource curse will be explored in another article.
Guyana’s current oil contract is criticised, too, for not adequately addressing local content requirements and employment opportunities for Guyanese. A more equitable contract would prioritise the development of local industries and the creation of jobs for Guyanese citizens within the oil and gas sector.
The lopsided nature of Guyana’s oil contract necessitates urgent attention and renegotiation. Expert opinions underscore the need for fairer terms, drawing inspiration from more equitable agreements in other oil-producing nations. The proposal for ring-fencing aims to ensure transparent and even distribution of benefits. Finally, the prioritisation of fairness over the sanctity of contracts aligns with the broader goal of individual, family, community, and national development.
