Another failed attempt to mislead

Dear Editor,

The publisher of Kaieteur News is overwhelmingly focused on exploiting every opportunity to find newsworthy headlines to boost the entity’s readership and sales–without any regard for accurate and factual reporting.

The newspaper’s front-page headline of Sunday, February 5, 2023, read “VP Jagdeo exposed.” The news article quoted the Vice-President in a radio interview when he was the Opposition Leader back in 2019, when he said: “We are going [to] renegotiate those contracts because that’s not what we had in mind…”

The publisher inadvertently interpreted this to mean that the Vice-President had committed to renegotiating the Stabroek Block Production Sharing Agreement (PSA).

However, the Vice-President is nowhere on record at any point in time when he ever said that once in gov’t that the Stabroek Block PSA will be renegotiated.

The manner in which the news article was written, and the narrative derived therefrom by the newspaper’s publisher suggests the following: a) The publisher exposed his deep ignorance of the industry, and /or, b) The newspaper is deliberately misrepresenting facts to mislead.

When the Vice-President said (in 2019) that they will renegotiate “those contracts,” it is worth noting that there are nine other active exploration licences other than the Stabroek Block production licence that have the same fiscal terms as the Stabroek Block PSA (as shown in the table).

Important to note is that whenever the hereunder mentioned operators will be moving into the production phase following any successful discovery in commercial quantities in the Kaieteur, Canje, Orinduik, Roraima, and Kanuku blocks, the new fiscal terms and the new PSA altogether will be applied.

These are in addition to the new oil blocks that are currently being auctioned.

Consequently, the government is doing precisely what the Vice-President said as

Opposition Leader in 2019–that is, “renegotiating those contracts.”

In so doing, by applying the new fiscal terms and new PSA to these existing exploration licences as they move to production, the new fiscal terms are effectively the “renegotiated terms” that will apply.

The Vice-President stated categorically on many occasions, even in opposition, that the Stabroek Block PSA will remain unchanged.

This notwithstanding, through better contract administration, the government will seek to maximize the in-country benefits from the oil-production activities. This was done through implementation of the Local Content Act and the gas-to-energy project, among others.

The Stabroek Block PSA was the only block that moved into production at the end of 2019. As such, by the time the government assumed office in 2020, renegotiating those terms would not have bode well for the country for a number of reasons.

The government has acknowledged this and provided its reasons for doing so on several occasions. The primary reasons for this surround the stability clause (investment security) for the investor (s) for an investment that is more than 10 times the size of Guyana’s pre-oil GDP and sanctity of contract. Furthermore, any attempt at renegotiation would also disrupt the momentum in the economy – that is, disrupting the entire value chain which would have an adverse impact on the economy. This is something that the government is keen to maintain — the “momentum.”

Apart from the foregoing, it was previously contended by this author that the sanctity of an investment contract and stability of investment goes hand in hand. This is especially important when a country that is historically underdeveloped has been starved of investments, foreign direct investment (FDI) in particular, and is seeking to stimulate investors’ confidence and to attract investments in the economy. Investment security and stability, especially in the context of the Stabroek Block PSA, are particularly important for Guyana to minimize the political and market risks of