January 21, 2020 / 3:03 AM / a month ago

UPDATE 1-Guyana opposition candidate pledges to keep Exxon contract intact

(Updates paragraph 1, adds paragraphs 8-9 to include Ali response)

By Luc Cohen

ANNA REGINA, Guyana, Jan 20 (Reuters) - Exxon Mobil’s oil contract with Guyana won’t be renegotiated if the opposition wins the March 2 election, the party’s top candidate said, adding that he would administer the deal better after reviewing terms.

While his People’s Progressive Party (PPP) has criticized President David Granger’s 2016 deal with Exxon as too generous, Irfaan Ali called the company - whose 1 million barrel cargo of Guyana’s first-ever crude production set sail on Monday - a “pioneer” in an interview over the weekend.

The PPP’s platform pledged to “immediately engage the oil and gas companies in better contract administration/re-negotiation.” Other companies exploring off the South American country’s coast include Britain’s Tullow Oil , Spain’s Repsol SA and France’s Total .

“Exxon is a different case,” Ali told Reuters after a campaign rally in the western Essequibo region, where thousands of red-shirted supporters listened to him and his allies promise to use oil revenue to lower taxes, raise pensions and wages, and help struggling sugar and rice farmers.

“Exxon was a pioneering investment,” Ali said. “But those that came after that time they were not pioneering, so they have to be examined in totality.”

The U.S. major, which operates a consortium with Hess Corp and China’s CNOOC Ltd, has discovered more than 6 billion recoverable barrels of oil and gas offshore, turning a country with no history of crude production into one of the world’s energy hotspots.

Others have not yet confirmed commercial finds. Tullow has made several discoveries in the past year, but the company has yet to find enough reserves to make the project work.

In a Monday night Facebook post in response to this story, Ali said the terms of the other deals must be renegotiated because they are “even more lopsided” than Exxon’s contract. But he said the administration of the Exxon contract should be improved, and that the company should use more Guyanese goods and services.

“As such we will review that contract to ensure that the administration of the contract brings greater benefit to Guyana,” he wrote.

Granger’s government has defended its deal with Exxon, which includes a 2% royalty and a 50% profit share after the company recoups its costs, noting that attractive terms were needed to secure investment in a risky new location.

That will bring Guyana around $230 million in government revenue in 2020 and nearly $2 billion total by 2024, according to the International Monetary Fund (IMF), a substantial boost for an underdeveloped country of less than 800,000 people whose central government spent just $1.2 billion in 2018.

Exxon spokesman Todd Spitler said “the negotiated terms of the contracts are competitive with other agreements signed in countries at a similar resource development phase.” A Tullow spokesman declined to comment. Repsol and Total did not respond to requests for comment.

Ali, a former housing minister, said it would be premature to say which parts of the other contracts need changing. But he said the contracts should make it easier for Guyanese companies to provide goods and services to oil explorers, arguing only foreign firms can handle lengthy payment delays. ($1 = 207.9800 Guyana dollars) (Reporting by Luc Cohen; Additional reporting by Neil Marks; Editing by Gary McWilliams and Daniel Wallis)

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