Guyana VP Touts Improved Oil Contract Management Amid Criticism

Guyana's Vice President Bharrat Jagdeo claimed in 2024 that the country has enhanced its management of oil contracts through the implementation of a Local Content Law and securing free gas from ExxonMobil to generate cheaper electricity. Jagdeo stated that the People's Progressive Party Civic (PPP/C) government no longer seeks to renegotiate the 2016 oil contract with ExxonMobil, Hess, and CNOOC, instead focusing on better contract administration to ensure Guyana benefits more from its oil and gas resources.

Under the Local Content Act passed in 2021, ExxonMobil is expected to spend $700 million this year to benefit around 2,000 Guyanese companies. Jagdeo also highlighted that the government has secured free gas from the Liza One and Liza Two projects to support the Gas to Energy project, which he claims is valued at tens of billions of US dollars over the life of the contract and will benefit Guyanese through lower electricity costs.

However, the government's management of oil contracts has faced criticism, with the opposition describing it as 'abysmal' due to the lack of transparency and failure to secure more benefits. The Production Sharing Agreement (PSA) terms have been labeled as lopsided, and there are concerns about the lack of transparency in the procurement process.

Jagdeo defended the government's approach, arguing that Guyana is not a co-manager of the project but can audit the costs and query any exorbitant contract prices through the cost recovery audit process. He maintained that despite the criticisms, the government has made progress in managing the oil contracts and securing benefits for the country.

Why this matters: Guyana's management of its oil and gas resources has significant implications for the country's economic development and the well-being of its citizens. The government's ability to secure favorable terms and ensure transparency in its dealings with international oil companies is crucial for maximizing the benefits of these resources for the Guyanese people.

Former Auditor General Anand Goolsarran has criticized the report by VHE Consulting on US$7.4 billion in expenses by ExxonMobil and its partners, stating that the report lacks basic structure and contains unnecessary quoting from the PSA. Goolsarran also noted that the auditors were unable to examine the documentation and process of transferring materials out of inventory, which he considers a major shortcoming of the audit.

As Guyana continues to confront the intricacies of managing its oil and gas resources, the government faces the challenge of balancing the need for foreign investment and expertise with the imperative of securing the best possible outcomes for the country and its people. Jagdeo's claims of improved contract management and benefits for Guyanese companies and consumers will likely remain a topic of ongoing debate and scrutiny as the nation seeks to make the

Key Takeaways

• Guyana implemented a Local Content Law, requiring ExxonMobil to spend $700M on Guyanese companies.
• Guyana secured free gas from ExxonMobil to generate cheaper electricity through the Gas to Energy project.
• The government's management of oil contracts faces criticism for lack of transparency and failure to secure more benefits.
• Former Auditor General criticized the audit report on $7.4B in ExxonMobil expenses, citing lack of structure and documentation.
• Guyana faces the challenge of balancing foreign investment with securing the best outcomes for the country and its people.