(Bloomberg) ExxonMobile Corp defended its contract with tiny Guyana as the oil major pushes to speed up production from the world’s biggest deep-water find in a decade.
“What the company needs more than anything right now is really profitable production flowing,” Oswald said. “The most important thing for us, for Guyana, and Exxon Mobil is this is production coming out super quickly. We’re going to get real high quality, extremely profitably production, early 2020. That’s a reasonable target.”
That’s why any discussion over the contract terms is an important issue for Exxon. Guyana has little expertise in regulating or negotiating oil contracts, so the country has enlisted several international organizations such as the IMF to help ready its fiscal, legal and regulatory systems.
In a November report, the IMF recommended Guyana rewrite its tax laws to increase its share of profitable oil and close out loopholes. It also recommended sticking by the current contract with Exxon and its partners, Hess Corp. and China’s Cnooc Ltd.
“You can say whatever you want but the experts are saying there’s nothing unusual or strange about the 2016 contract,” Oswald said, citing studies by Wood Mackenzie and Rystad Energy. The consultants say it’s a “middle of the road average contract” for a frontier country, he said.
In any case, the 2016 deal itself was a renegotiation of a 1999 contract.
“We had that contract in place,” Oswald said. “When that conversation with the government started we were fully considering saying maybe we should just stay with the contract we have.”
Guyanese officials including Mineral Resources Minister Raphael Trotman and Business Minister Dominic Gaskin have said the country has no intention of renegotiating the Exxon deal. Trotman has said he will push to implement the IMF’s proposals.