Dr Thomas’s column ignored the many serious defects of the Exxon/Esso PSA

Dear Editor,

Dr. Clive Thomas in his Column “Cost Recovery and the Fiscal Terms of Guyana’s Production Sharing Agreement” in the Sunday Stabroek of February 4 stated that “judging from the public debate, so far, the most contentions public issue has been the level at which recovery cost is to be calculated and administered”. This is deliberately misleading and definitely not true.

In fact, the public debate in the Exxon/Esso Agreement has focused primarily on the secrecy, illegalities, improprieties and absurdities of both the 1999 and 2016 Agreements. The debate actually started with the reluctance of the APNU+AFC Govern-ment to release the Agreements and the whole business of the US$18M signing bonus.

Dr. Thomas must be aware that the 2016 Prospecting Licence and the Bridging Deed designed to link the 1999 Agreement signed by Janet Jagan and the 2016 Agreement signed by Minister Trotman have not yet been released. Dr. Thomas, as a high government official, may wish to bring his influence as Presidential Advisor to have the documents released.

The 2016 Agreement which replaced the 1999 Agreement repeats and expands the number of violations of the Petroleum Act. This should cause every Guyanese grave concern. The violations include:

  1. The granting of 600 Blocks for exploration when the Act provides for a limit of 60, other than in exceptional circumstances.
  2. The 17 years that it took for Exxon/Esso to declare a discovery of commercial quantities when the Act provides for a maximum period of 10 years 6 months for exploration, after which blocks have to be relinquished.
  3. The problem of the 2% Royalty is hotly contested. It is unconscionably low, less than every other comparable country.
  4. The now infamous signature bonus over which so many lies have been spoken, is compounded by placing these funds in a secret account at the Bank of Guyana the Government knowingly violated Article 216 of the Guyana Constitution.
  5. Exxon/Esso is permitted to not carry any independent insurance, making it nearly impossible for anyone to make a proper claim against them for damages when the spills occur, which they most certainly do as happens all over the world in this industry.
  6. Exxon/Esso has not provided a Performance Board to cover default on their obligations. This is a requirement of the Act.
  7. Exxon/Esso has failed to provide, ahead of receiving a mysteriously new prospecting licence, definitive and satisfactory plans for training and hiring of local staff and for procurement of goods and services in Guyana required by law.
  8. In order to carry out any audit, the Minister is required to give 7 days’ notice to visit the site and to do so at his own expense.
  9. In a challenge to Guyana’s sovereignty, Exxon/Esso demanded that the agreement be governed by and interpreted in accordance with the laws of the Republic, “appropriate” rules of international law, plus “generally accepted customs and usages of the international Petroleum industry”, whatever that means. Does anyone know where these customs and usages are codified so we can read them?
  10. An absurdity of no mean order is set out blatantly in Article 6 the PSA dealing with delegation of Ministerial responsibility. While the agreement acknowledges the power of the Minister to delegate some of his functions – (why this is Exxon’s business is a mystery) – it goes on to say in Article 6.2 (a) that there are five functions that the Minister may not delegate but “shall” maintain the Authority and responsibility for. Well! Well! This is quite incredible.
  11. The arbitration provisions of the agreement are clearly drawn up by Exxon/Esso in favour of Exxon/ Esso. It provides for arbitration of any dispute to the International Centre for the Settlement of Invest-ment Disputes (ICSID). If ICSID refuses to entertain the request; this goes to UNCITRAL a body of the United Nations. If and when this happens, the American Arbitration Asso-ciation shall administer the Arbitra-tion and Act as the appointing Autho-rity. How nice? This is what Trotman signed to.

The above stated items are only a few of the illegalities and absurdities mentioned. There are many more and these will be enumerated in due course.

In his column of January 28, Dr. Thomas, states that “much of Guyana’s debate has been sterile bickering and unconstructive” because of an absence of a “coherent appraisal framework.” Such anonymously targeted, generalised criticisms are improper, unprofessional and unbecoming of a respected national scholar. Thomas debases a major national issue by attempting to denigrate Guyanese who try to fill in missing gaps by providing information and clarity in simple non-professional language.

The fact of the matter is the contract is a bad one. It is also illegal, having been constructed “outside of the law.”

And by the way, Professor, are you not aware that Section 2 of the Petroleum (Production) Act Chapter 65:05 states that “property in petroleum in Guyana is vested in the state and the “state” shall have the exclusive right of searching for and getting such petroleum”? Exxon/Esso and all the rest of them can only operate as agent, servant, employee or contractor of the Republic of Guyana.

No one can search or get petroleum in Guyana by himself. Only the State can. That is the law.

Yours faithfully,

Ramon Gaskin

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