Melinda Janki, an international lawyer, recently criticised the Production Sharing Agreement (PSA) that governs the Stabroek Block.
Stabroek PSA lets oil companies take an unquantified amount from Guyana’s revenue – Melinda Janki
It is rife with controversy. It has been called illegal by some because of the circumstances under which the concession was granted, and it has been deemed unfair because of a range of provisions tucked into it.
Article 11 of the PSA speaks about Cost Recovery and Production Sharing. Article 11.9 affords the Contractor the right to use from the production for its operations.
It states “The Contractor shall have the right to use in any Petroleum Operations as much of the production as may reasonably be required by it therefor and the quantities so used or lost shall be excluded from any calculations of Cost Oil and/or Cost Gas and Profit Oil and/or Profit Gas entitlement.”
The Contractors on the Stabroek Block are Exxon’s subsidiary, Esso Exploration and Production Guyana Limited (EEPGL); Hess Guyana Exploration Limited; and CNOOC Nexen Petroleum Guyana Limited.
Janki says that the quantity of the production that the companies are allowed to take covers all the prospecting operations and all the production operations that they carry out.
“Esso, Hess and Nexen can take as much oil as they reasonably require for their Petroleum Operations.” Janki says.
“Don’t ask me what these oil companies reasonably require. I don’t know. The Government doesn’t know either. It could be anything. It could be one barrel. It could be 99 barrels. The Petroleum Agreement doesn’t have a limit.”
Janki contends that this provision, by not capping the amount the oil companies are allowed to use for their operations, is “willfully obscure”.