GEORGETOWN, Guyana, CMC – The President of ExxonMobil Guyana, Alistair Routledge, has all but ruled out a renegotiation of the Production Sharing Agreement (PSA) because it would adversely impact the company’s planned US$55 billion investment in Guyana.
“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.
But he told reporters that if the basis for the investment changes, including at least an increase in the royalty from two to five percent, it would undermine its basis if the original numbers change.
“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.
Routledge spoke about the issue after the Opposition Leader, Aubrey Norton, outlined his 20-point plan for the hydrocarbon sector should the main opposition People’s National Congress Reforms (PNCR) win the 2025 general elections.
Norton said that the plan includes invoking Article 32.1 of the PSA, which states that the company must give permission for any of several things, including renegotiation, to be done with the PSA.
“Except as may be expressly provided herein, the Government shall not amend, modify, rescind, terminate, declare invalid or unenforceable, require renegotiation of, compel replacement or substitution, or otherwise seek to avoid, alter, or limit this Agreement without the prior written consent of Contractor.”
He asked whether he believed Guyana was entitled to more revenues now that the Guyana-Suriname Basin has been de-risked. Routledge said investments and revenues were hinged on the existing agreement covering 30 years.
Routledge told reporters it is better to have a “fair share of a much larger number, and ultimately that’s more meaningful for the country” instead of a large share of a smaller number.
Routledge also believed that the country’s Local Content Act provides a guideline for oil and gas companies and opens the doors to numerous opportunities for local businesses and citizens.
Passed in 2021, the legislation allows Guyanese businesses to benefit from employment and contractual opportunities that supply various goods and services to the oil and gas sector.
The Act defines 40 subsectors that include transportation, accommodation, legal services, marketing, and public relations. It also requires that a percentage of these goods and services be provided by Guyanese.
Routledge said the legislation provides another avenue for Guyanese to benefit from developments in the oil and gas sector.
“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,” he said.
Routledge pointed out that the Act’s usefulness is in ensuring foreign companies have the opportunity to partner with local businesses through a clear framework to provide a higher level of service to companies operating in the oil sector.
“I think the Act has been helpful…is for new entrants to the country is clear based on which they are expected to come in and to encourage them to partner with local investors and companies. I think that has been helpful, [giving] clarity for new investors in the country,” Routledge said.
The Local Content Secretariat manages the Local Content Register, a database containing the names of over 900 local companies qualified to benefit from opportunities provided under the Act.
Routledge said the agency has played a critical role in streamlining communication between the Guyana government and ExxonMobil.
As a result of the Local Content Act, local companies have earned nearly one billion US dollars, and a government statement indicates that 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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