Call for new Guyanese government to renegotiate Exxon's 'exploitative' oil deal

By agency reporter
August 19, 2020

Global Witness has called on Guyana’s new government to immediately investigate and renegotiate Exxon’s exploitative oil license, ensuring the country has the funds needed to rebuild after divisive elections and a debilitating pandemic.

In February 2020, Global Witness’ exposé Signed Away revealed that Guyana could lose billions of US dollars from a 2016 Exxon oil deal, according to a report by the fiscal analyst firm OpenOil, commissioned by Global Witness. The deal, for an offshore license called Stabroek, has bad financial terms thanks to Exxon’s aggressive negotiation tactics with inexperienced Guyanese officials.

“With Exxon increasingly dependent upon an immense Guyanese oil find, President Irfaan Ali has a remarkable opportunity to make a new deal while showing the interests of all Guyanese – not Exxon – are at the heart of his administration”, said Jonathan Gant, Senior Campaigner at Global Witness.

The Global Witness investigation showed that Guyana’s lead negotiator – former-Natural Resources Minister Raphael Trotman – rushed to sign Exxon’s deal despite knowing the company would soon announce new oil find results and while experts were telling him to seek more information.

During negotiations, Trotman also suffered an apparent conflict of interest as he was a close political ally with one of Exxon’s Guyanese lawyers. The lawyer – Nigel Hughes – has denied he represented Exxon on the deal, but admitted that his firm had represented Exxon since 2009 and that he has worked for the company on other matters.

Exxon’s license is the subject of ongoing litigation in Guyana, with civil society groups arguing it is illegal. And in August, the UN Human Rights Committee demanded Guyana both address reports of corruption during the award of Stabroek and state how oil drilling was compatible with efforts to fight climate change.

Global Witness believes President Ali’s government should investigate Stabroek to determine if it was properly awarded. Exxon has denied the deal is bad for Guyana and disputes Open Oil’s analysis, as has the oil data company Rystad. In January, the then-Guyanese government said the deal was reasonable and that Guyana needed Exxon during the country’s maritime border dispute with Venezuela. And both Exxon and former-officials, including Trotman, have denied that any laws were broken or that there was a conflict of interest.

“Guyanese people deserve a new deal for schools, hospitals, and sea defences to hold back rising sea levels – and with an economy weakened by COVID-19, they need it now,” said Gant. “With these new funds in hand, Guyana can do its part to fight the climate emergency and ban any new drilling by oil companies.”

At the same time, Guyana’s recent national elections have exacerbated the country’s divisions. Voting was held in March 2020, but the results were heavily contested and tensions rose to a point at which commentators became concerned about the risk of civil unrest. In August, the former opposition – led by the People’s Progressive Party – was declared the winner and President Ali was sworn into office.

The Guyanese government must now seek to heal the country and show the people it is prepared to both investigate Exxon’s license and get the deal Guyana deserves, said Global Witness.

Bharrat Jagdeo, who is now Guyana’s Vice President, has previously pledged to renegotiate the country’s oil licenses once in power. However, he made a specific exception for Exxon, stating he would not renegotiate the Stabroek deal. According to press reports, the new government has now commissioned a “review” of one of Exxon’s smaller licenses, called Payara.

Global Witness believes renegotiating the Stabroek contract with Exxon is possible. Even before the outbreak of COVID-19, the company was highly dependent upon its Guyanese oil finds. As oil prices have crashed during the pandemic, Exxon has continued to point investors to Guyana as a reason for hope.

“Now is the time for President Ali and Vice President Jagdeo to not only make good on their campaign promises, but to do one better”, said Gant. “Guyana’s oil licenses – including Exxon’s Stabroek – should be renegotiated. Guyanese people deserve a better deal. And if the government is not prepared to give them this, then the people should call for these bad deals to be cancelled.”

* Download Signed Away: how Exxon's exploitative deal deprived Guyana of up to $55 billion here

* Global Witness https://www.globalwitness.org/en/

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