Of 2016 pact
eport noted that one week ter, Venezuela issued a presiential decree claiming sovergnty over the offshore space. The law firm said that ased on its investigation, here were a number of reaons why the government and he GGMC decided to carefuly look at extension of the etroleum agreement. It highghted the geo-political conderations.
“These included :( a) EPGL is a subsidiary of xxon which is the largest US il and gas company and it is osely associated with the nterests of the US government. Hess is also a major US il and gas company whose nterests you would expect the S government to also seek to rotect. It seems likely that the overnment of Venezuela ould have to give careful onsideration to taking any ction (military or otherwise) hat would threaten the intersts of EEPGL and Hess. earing in mind the relative eakness of Guyana’s military as discussed in Section 6 bove), the long history of tertorial controversies and the nstable situation in enezuela, it is entirely reaonable that having a strategic nk with US investors was a major consideration for the overnment,” it said while so pointing to China’s ower in CNOOC.
This position has been rticulated by government efore including in defending s bargaining of the US$18 million signing bonus.
Continuity
On 19 May 2015, the law rm said, it understands that xxonMobil sent a proposed Escrow Process” flowchart, etting out the various steps nd timeline for the execution f a new petroleum agreement. his was accepted and is now he current contract.
On 27 January 2016, rotman was informed by ennison that the Contractor
Consortium was on track to complete 3D seismic surveys by March 2016 and to spud Liza-2 by 1 February 2016. The 27 January 2016 briefing also outlined the possibility that a “new contract area” could be granted to the Contractor Consortium “subject to whatever terms of contract are eventually agreed through negotiations.” In February 2016, the 3D seismic survey of the Stabroek Block was concluded. On 5 February 2016, drilling of Liza-2 commenced in order to further evaluate the Liza-1 well. On 4 and 5 April 2016, the Technical Meeting took place between ExxonMobil and officials representing GGMC in The Woodlands with key individuals from both organisations attending that meeting.
Government, according to the report, could have tried to press for better fiscal terms but from all of their information, that was not the focus.
“The government could have taken a different approach and tried to have extensive negotiations on the terms of the 2016 Agreement, principally to improve the fiscal terms. However, such an approach was not in the forefront of the Government’s mind. The Government was more focused on ensuring continuity with the Contractor Consortium and achieving progress in the Stabroek Block…,” it stated.
“Also, a more hard line approach with the Contractor Consortium would carry the risk that the Contractor Consortium would not have agreed the revised terms and may have relinquished the acreage (outside the discovery areas) in June 2018. This may seem unlikely in the light of all the discoveries made by the Contractor Consortium since 2016, but this was knowledge the Government did not have when negotiating the 2016 Agreement,” it added.