In my essay of December 20, 2023 (Stabroek News), readers would recall that I sought to robustly challenge Mr. Christopher Ram’s unsubstantiated aspersion, that the stability clause contained in the Petroleum Agreement (2016), ceded legislative sovereignty to ExxonMobil. In that article, I manifestly demonstrated how Mr. Ram’s irresponsible aspersion is woefully and dangerously misplaced. To corroborate my contention therein, I cited the case of Venezuela versus ExxonMobil, a case which had detrimental implications for Venezuela, whereby ExxonMobil and their co-venture partner had invoked “international investment law and arbitration”, to seek compensation from the Venezuelan Government to the tune of over US$40 billion.
Unsurprisingly and disappointingly, in his response to this author published in the Stabroek News edition of December 21, 2023, instead of addressing the substantive counterarguments put forward by this author by rigorously defending his position with alternative evidence, he diverted his attention to focus on an inconsequential aspect of the broader argumentations. It begs the question as to whether Mr. Ram, by virtue of him completely ignoring the substantive contentions on the subject, exposed his inability to defend his position, and if so, why should the public take him seriously? More so, why should his students take him seriously?
Notwithstanding, since he’s opted to address only an inconsequential matter, it is imperative that this author addresses the specific matter he raised, in a more substantive manner. To this end, Mr. Ram took issue with the expiration date. Pursuant to the Petroleum Agreement (2016), the Contractor (ExxonMobil and Co-Venture (Hess and CNOOC)), is granted two licenses, namely the Prospecting Licenses, which is the license that governs the exploration activities, and the Production Licenses. In order to determine the expiration dates of both licenses, it is not as straightforward as Mr. Ram makes it appear. One has to consult with the relevant provisions in the Petroleum Agreement to practically calculate the expiration dates, contingent upon other factors, such as whether there was any “force majeure” event, the date of issue of each license and having established the effective date of the Petroleum Agreement, not the execution date.
Firstly, Mr. Ram consistently refers to the June 2016 date of the Petroleum Agreement as the effective date. However, that date is clearly stated as the execution date of the Agreement, according to the “Affidavit of Due Execution” appended to the Agreement. In contract law, both dates have different implications. Article 30 of the Petroleum Agreement establishes the effective date, where it states that…” This Agreement shall enter into force and effect on the date in which the Petroleum Prospecting License in respect of the Contract Area is in full force and effect (the Effective Date)”. Therefore, the effective date of the Prospecting License is the date that the Prospecting License was issued in accordance with Article 30 of the Petroleum Agreement.
Hence, while the Prospecting License is not in the public domain, on both occasions, this author verbally confirmed with the “industry actors”, the effective date―that is, the date the Prospecting License was granted, to which the October date was revealed. Unless Mr. Ram has a copy of the Prospecting License and the effective date thereof is otherwise stated, then he should publish same to remove any doubt whatsoever in the interest of absolute clarity.
Secondly, one has to consult with Article 3 (Petroleum Prospecting License and Guarantee) of the Petroleum Agreement (2016), in order to establish the lifespan of the Prospecting License. Article 3 states the following:
- On the date of this Agreement, the Minister in accordance with the Act, the Regulations, and the terms of this Agreement, shall grant to the Contractor the Petroleum Prospecting License for an initial period of four (4) years from the Effective Date over the area described in Annex A and shown on the map attached as Annex B hereto”.
- Subject to Article 4 and the other terms of this Agreement, such Petroleum Prospecting License may be renewed but not more than twice at the election of the Contractor for consecutive periods of up to three (3) years each in accordance with the provisions of the Act and the Regulations.
Thus, in accordance with Article 3 of the Agreement as per the above reference therefrom, it can be established that the lifespan of the Prospecting License is ten (10) years based on the initial period it is valid for, and the (maximum) number of times it can be renewed (twice) and for what period (3 years) … It is also public knowledge that the Prospecting License was extended for a period of one year―since a force majeure event was invoked during the pandemic period. This is how this author arrived at the year 2027 for the expiration of the Prospecting (exploration) license. Whether it is June 2027 or October 2027, that is subject to verification, upon verification of the issuance date of the Prospecting License, which is not in the public domain.
Thirdly, Mr. Ram confidently posited that the expiration of the Production License is in the year 2057. It is virtually impossible for anyone to, at this time, determine the expiration of the Production Licenses. In this respect, it must be noted that there are multiple Production Licenses, that are also not within the public domain to independently verify same. So, again, in consultation with the “industry players”, it was established that the lifespan for each Production License is for a period of twenty (20) years. Of importance to note―as well―is that each “oil field” or “Project Development Area” has its own Production License, since the developments are done in phases, through multiple projects.
With this in mind, it is unclear how Mr. Ram arrived at the year 2057 for the expiration of the Production License, because even if he assumes that following the expiration of the Prospecting License in 2027, that the final Production License (s) will be granted in the year 2027. This means that the final Production Licenses will expire in 2047 and not 2057; except if he assumes that the Production Licenses that follow the expiration of the Prospecting License will be granted 10 years thereafter.
On a more serious note, only when all the exploration activities will have ended, wherein it is already established that all things being equal, will be in the year 2027, that only thereafter, based on the future discoveries and development plans, that one can, with precision, determine the expiration of the final set (s) of Production License (s) pursuant to the 2016 Petroleum Agreement.
Finally, in view of the foregoing, I hereby invite Mr. Christopher Ram to update his awareness of all the current updated facts and other considerations before authoring any future missive (s) on the subject matter.