ExxonMobil Rules Out Renegotiation of Production Sharing Agreement
No Plans to Re-negotiate Deal
GEORGETOWN, Guyana – ExxonMobil Guyana President Alistair Routledge has effectively ruled out the possibility of renegotiating the Production Sharing Agreement (PSA) due to the potential negative impact on the company’s planned US$55 billion investment in Guyana.
Renegotiation Unlikely
"We have no interest in invoking that Article. As I say, we’ve made US$55 billion worth of commitment to the country. Going back and undermining the basis of that investment would seriously challenge any future investments," he told a news conference.
Routledge explained that should the basis for the investment change, including a possible increase in the royalty rate from two to five percent, it would undermine the investment thesis. "If we start to have uncertainty around the basis for the investment, not just the geologic risk, the execution risk, then it seriously starts to undermine that investment thesis," he said.
Local Content Act
Routledge also highlighted the country’s Local Content Act, which came into effect in 2021. The legislation allows Guyanese businesses to benefit from employment and contractual opportunities in the oil and gas sector. The act defines 40 subsectors, including transportation, accommodation, legal services, marketing, and public relations, and requires that a percentage of these goods and services be provided by Guyanese.
"We recognize that this is Guyana’s resource, and we want the people not only to benefit from what we pay in royalties and profit share or taxes but also in the development phase; we are making opportunities available as quickly as we can for people to be employed and for businesses to benefit and grow," Routledge said.
Conclusion
In conclusion, ExxonMobil has no plans to renegotiate the Production Sharing Agreement, citing the potential negative impact on its investment in Guyana. However, the company is committed to the country’s development and has implemented various initiatives to benefit local businesses and citizens.
Frequently Asked Questions
Q: Will ExxonMobil renegotiate the Production Sharing Agreement?
A: No, ExxonMobil has no plans to renegotiate the agreement due to the potential negative impact on its investment in Guyana.
Q: What is the Local Content Act?
A: The Local Content Act is a legislation passed in 2021 that allows Guyanese businesses to benefit from employment and contractual opportunities in the oil and gas sector.
Q: How has the Local Content Act benefited local companies?
A: As a result of the act, local companies have earned nearly one billion US dollars, and several other opportunities will open up by the end of the year in areas such as transportation, electrical, plumbing, and administrative support.
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