Guyana is set to reap substantial benefits totalling approximately US$2 billion from the Wales Gas-to-Energy Project and the Local Content Law even though both received strong opposition from ExxonMobil, the operator of the prolific Stabroek Block.
This revelation came to light during a recent interview on the Gildarie-Freddie Kissoon Show, where local Financial Analyst, Joel Bhagwandin sought to highlight the “strength” of the People’s Progressive Party (PPP) government in defending the interest of the people. In response to critics claiming that the government has not been forceful enough in dealing with Exxon and that the company has been taking the lion’s share of benefits from Guyana, Bhagwandin asserted that the government’s refusal to renegotiate the 2016 Production Sharing Agreement (PSA) actually positioned it to negotiate on other matters from a position of strength, and thereby yielding substantial leverage.
Bhagwandin revealed that Exxon had expressed displeasure with the gas project from the outset and had actively campaigned against it, even going so far as to hiring a firm to dissuade the government from pursuing the project. However, the government remained steadfast and resolute in its commitment to the initiative, which will now go ahead, much to Exxon’s chagrin. “The gas to shore project that everybody is beating up the government about, Exxon is not happy about the gas to shore project, they never wanted to do the gas to shore project,” he claimed.
Additionally, Bhagwandin discussed the significance of the 2021 Local Content Act, which aims to ensure Guyanese businesses and citizens benefit from the burgeoning oil and gas industry. The act mandates that companies operating in the country must hire a certain percentage of local workers and use a certain percentage of local goods and services across various categories. Over time, these percentages will progressively increase as local workers and companies gain capacity and knowledge, ultimately leading to Guyanese providing a significant portion of the industry’s services and workforce. However, Bhagwandin said that “Exxon never wanted the local content. Exxon fought against local content.”
Despite Exxon’s opposition, both initiatives are already in progress and are expected to result in tangible benefits for the country, amounting to an additional US$2 billion in revenues per year. Furthermore, Bhagwandin highlighted that Guyana is already receiving US$1 billion annually from current oil production in the Stabroek Block. He asserted that due to the PPP government’s adept leveraging of the situation with Exxon to compensate for losses under the 2016 PSA, Guyana stands to benefit even more from its oil and gas resources.
