Allan A. Fenty says: ‘Mind you re-negotiation can happen if ever an oil giant knows it will still be reaping whirlwinds of profit on investments. I have some gut feeling that Exxon and its subsidiaries are not such” (SN August 26th).
Mr. Fenty’s statement is filled with ambiguity, wishy-washy; very uncharacteristic of him. Do not doubt what a United Guyanese people can do. Yes, they can rise up – Parking Meter protest is a good example – and force Exxon back to the table.
The oil contract – unlike a contract to purchase a house (consummated in 3-6 months) – goes on for 30+ years. That’s why the contract specifically says: ‘it can be renegotiated, providing both parties agree’.
A strong leader of any nation faced with a lopsided contract causing his nation to lose billions of dollars has a lot of powers and leverages to force Exxon back to the renegotiation table. Persuadable powers using facts, reason and commonsense, as well as powers of coercion. It is not in the interest of the Guyanese nation to have a “coercive renegotiation”, but if it comes to that, let it be. A recalcitrant and unreasonable Exxon is to blame.
What does that phrase mean, “both parties must agree”?
It certainly does not mean it cannot, under any circumstances, be renegotiated. Cannot under any circumstances? That is very likely the “Sanctity of contract” folks talk about – but that principle is not mentioned anywhere and does not apply to this oil contract.
It simply means it can be renegotiated. We need a leader who has the conviction that the contract is lopsided -Trotman was compromised when he signed it – and who will articulate reasons for renegotiation. Not reasons not to renegotiate. Mr. Jagdeo’s statement issued by DPI under Kemol King’s byline (Nov 2021) is a classic fool’s statement articulating manufactured reasons not to renegotiate. One would think such a statement could only have come from a VP of Exxon, not a VP of Guyana. The DPI statement stated three reasons why the contract could not be renegotiated: Sanctity of contract; Previous govt. should have negotiated a proper contract; Believing it can be renegotiated is “wishful thinking”. All false and incomprehensible.
Let’s reason something. If oil prices dropped to $35 a barrel, do you think Exxon will invoke that clause that says the contract can be renegotiated”? I have no doubt Exxon will. Exxon understands the “power imbalance of the two parties to the contract” – and have always exploited it to their advantage. (Stating the case to prove Exxon has exploited the weak laws of the State and has manipulated its weak leaders will require a separate letter).
Now what happens if oil prices enter a period averaging $90 a barrel (that’s a huge windfall gain $90 – $65)? Is it not reasonable for GoG to invoke that same clause for the benefit of the Guyanese people, namely, to share in the windfall profit? (Today’s Oil price on the world market – WTI crude $96, Brent crude $104 a barrel).
To Mr. Allan A. Fenty, I say, The Guyanese people must start to believe in themselves, in the power they have. A good example: the successful Parking Meter protest. And, of course, we need Better Leaders. Fenty should tell Mr. Jagdeo, “He VP of Guyana, He not VP of Exxon”.
Stabroek Block with reserves of 11 bb must be renegotiated. On royalty alone, it is a $42 billion loss (11 billion barrels, times 4.25%, times Av price $90). Can be renegotiated! Must be renegotiated!
Mike Persaud
