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Offshore Energy Today
The Bahamas-flagged very large crude carrier (VLCC) Tina has arrived at Singapore's Keppel Shipyard where it will be converted into an FPSO unit for SBM Offshore and then used to develop ExxonMobil's Liza field offshore Guyana.
ExxonMobil said a US$18 million signing bonus was deposited into a government account at the Bank of Guyana last year, and called for such transactions with all other companies to be made public in the future. Country Manager of ExxonMobil (Guyana), Rod Henson said a bonus is _customary and normal_ in many petroleum agreements as part of the total financial agreement. Critics claim the money was not deposited into the Consolidated Fund and is not reflected in financial records at the Bank of Guyana, violating the Constitution and the Fiscal Management and Accountability Act.
MINISTER of Natural Resources Raphael Trotman said external advisors and lawyers advised that government should not release the full contract with oil giant, Exxon Mobil, noting that a number of extenuating and external issues … some of which have foreign affairs, sovereignty and national security implications. Petroleum Advisor to the President Dr Jan Mangal said that as an emerging oil and gas country, Guyana needs to place significant emphasis on transparency.
The expert who has over 18 years' experience in the sector noted that Guyana is on the verge of an economic transformation and though success cannot be guaranteed, transparency will aid in success. “Oil and gas, or any resource…we cannot assume that it will work for the benefit of the people; it doesn't just happen by chance,” he said citing West Africa. Key ingredients to success are transparency and capacity. “It has been proven .. that in a resource sector, the exploitation of resources, transparency is paramount and it is ultimately the people's resource so they need to be confident and to trust government is acting on their behalf.” Guyana is starting from base within the oil and gas sector, therefore building capacity rapidly is critical. That capacity has to come from further afield. As a result of the overarching need for transparency, all contracts, ought to be made public. “I believe all contracts, resource contracts should be made public not only petroleum, diamond, gold and timber….. all resources of the people…. that is my objective.” In the long term, it is the people of Guyana who will be affected.
His statement came in response to the non-disclosure of the government contract with Exxon Mobil, as well as the reported US$20M signature bonus. Dr Mangal believes that the signature bonus needs to be made public as it must be auditable. “…people need to have confidence in their representatives and the way to do that is via transparency.” Government was urged to release the contract by civil society, Transparency International Guyana, the opposition People's Progressive Party (PPP), the Working People's Alliance (WPA) of the parties in the APNU+AFC coalition government.
Trotman said it is not advisable to release the contract …stressing that it would not be to the nation's benefit. Government has taken a decision not to release the full contract. “We have released quite a few details …. persons are wise enough .. you can… get a sense of what is the contract but there are a number of extenuating and external issues which are being examined, some .. have foreign affairs implications, some ..have sovereignty implications, some have national security implications and Government has been advised by external advisors and lawyers that … we should not bare all. It is perhaps not palatable to everyone to accept that and sometimes advice is not always what you want to hear but it is important that if you have retained experts and others to advise you that you abide by their advice.” He believes that in due course, Cabinet will lift what he deems to be an injunction so that “everything will be opened. There is nothing … that could sink anyone or sink a Government. …. it is really a continuation of a 1999 contract .. tweaked in just a few places and so there is nothing to hide. It is just for different reasons, some of which I have just explained …at this part in our juncture … we ought not to lay our contracts bare … .. there are … .. contracts with other operators that Government inherited and so it is not a matter of just releasing one contract. ” Government will have to release all contracts eventually and approach all operators and work out when and what they wish to be exposed making reference to confidentiality clauses. “It is a matter of working with your partners and operators to ensure that we are at one,” said Trotman.
Dr Mangal feels that if pressure is placed on the government the documents will be released. “I believe ultimately it will happen … people are usually reluctant to give out information because they feel they'd be criticised. It will take some time ….. it will only happen if people keep requesting it. ..” he stated. The Petroleum advisor pointed out that while government may have an intention to release the documents, the process would probably be faster if civil society demands same. “Ultimately the government will publish it but it might be quicker if put under some pressure,” he declared.
Trotman said that citizens will feel there is nothing to hide. He agreed with Dr Mangal that it is normal for suspicion to linger….. especially where natural resources are concerned. “We have not yet started production .. there is no revenue that is being hidden or siphoned away but we have been working very closely with the IDB, with the World Bank and with the IMF to develop a framework,” said Trotman. The Commonwealth Secretariat assisted in the crafting of a regulatory commission for the sector. That legislation, the Petroleum Commission Bill has been publicly criticised as giving the minister too much power; something Trotman said he is not surprised by.
“…but when one looks at the manner in which semi-autonomous agencies are established in Guyana… they all are the same. …the Minister directs policy …, … because we are dealing with oil and its ability to corrupt… change and transform societies, there is a push for wider powers and …, we want a nationally accepted Bill.” Government will pay full attention to comments and criticisms and efforts will be made to re-engage the Commonwealth Secretariat later to work on the legislation. “So we expect that the Bill … will go through several different changes and people can feel confident that they will not see things as they are… .. people want to see a greater civil society engagement and involvement. We are going to allow that. We are going to allow greater participation of the Parliamentary opposition and we are going to see reduced powers of the Ministers.” Guyana was accepted as the 53rd member of the Extractive Industry's Transparency Initiative.
The requests for more disclosure from the Government regarding all oil and gas contracts have been overwhelming.The Minister will be seeking guidance from Cabinet about all details pertaining to the contract with ExxonMobil. He has “every confidence that in time, the citizens of Guyana will have full access to everything.”The Minister made this declaration in relation to comments by Chartered Accountant, Chris Ram. The tax expert said that many are aware of his conviction that there was no reason for the new Petroleum Agreement that the Government signed with Exxon and its partners. Mystery surrounds the reason for the new agreement. A source indicated that the reason is not as mysterious as it may seem. The explanation is very simple. The Government of Guyana used the excuse of a new licence to extract a signature bonus, a payment made by a contractor on the signing of an Agreement to take up any given number of blocks. The figure is US$20M. If this information is accurate, the question is, “To whom was the payment made? While an early Budget is a commendable achievement, the possibility of transactions not being properly and fully accounted for, must not be discounted because of the incomplete fiscal year…Here is the question: “Was Guyana paid a signing bonus on signing of the secret Trotman Agreement, and if so how, when and how is that money accounted for? It would be folly to think that our new found status of membership at the Extractive Industries Transparency Initiative (EITI) will lead to any significant enhancement in terms of disclosure and accountability. There is simply no sign of any willingness on the part of this Administration., Trotman and the others must have known that the number of blocks granted to ExxonMobil and its partners by (former President), Janet Jagan under the now displaced 1999 Agreement, was in excess of what the law permitted and that those blocks could always be challenged. US$20 million is a small price to pay to lock in a huge portion of petroleum resources, a real bargain!”
ISSUES.... 12/ 18/ 2017 - Send Us Your Issues
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