Author: ChrisRam

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Every Man, Woman and Child in Guyana Must Become Oil-Minded (Part 18)

Trotman and Turbot

The good news

This column keeps meeting distractions from week to week. Column 17 last week indicated that Articles 12 Natural Gas and 13 Valuation of Crude Oil would be addressed later in this series. They will have to wait as we turn to two issues taking place this week, one the good news and the other the bad stuff. Let us start with the good news first. Yesterday October 5, ExxonMobil Corporation announced yet another oil discovery offshore Guyana. This means that since the May 2015 announcement of a huge find we have had four other finds. Liza, Payara, Snoek and Liza Deep, and now Turbot. The well was drilled to 18,445 feet (5,622 meters) in 5,912 feet (1,802 meters) of water on Sept. 29, 2017. The Turbot-1 well is located in the southeastern portion of the Stabroek Block, approximately 30 miles (50 kilometers) to the southeast of the major Liza phase one project.

Guyana is blessed. All we can hope is that good and intelligent leadership and competent and careful management will ensure that we do not transform this blessing into a curse. Experience shows that nothing can be taken for granted, internationally or in Guyana. Continue reading “Every Man, Woman and Child in Guyana Must Become Oil-Minded (Part 18)”

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What are the real curses?

Two statements reportedly made by President David Granger in a speech to an audience in New York while attending the United Nations General Assembly attracted my attention: one was an exhortation to members of the Guyanese diaspora to return home as the country needed brains, not barrels, and the other was a description of sugar, rice, bauxite, gold, diamonds and timber as the “curse of the six sisters”, perhaps a play on the Seven Sisters in oil.

Unfortunately, Mr Granger did not on that or any earlier occasion indicate the basis, logic and justification of the call for brains. Guyanese abroad respectfully attend presidential visits as a social event but have not been responding to President Granger’s several calls, in the absence of an industrial or investment policy, or a diaspora policy, or a crime policy. We not only need such policies but also a study to identify the skills set the President so much wants to attract.

In their adopted countries, the members of the Guyanese diaspora have worked hard to acquire their skills, operate in a functioning democracy (despite Trump), are employed in an organised and professional work environment, are reasonably well paid, are not subject to glaring discrimination, enjoy a decent standard of living and, very importantly, feel safe in the society in which they live. None of these can be taken for granted in Guyana. Continue reading “What are the real curses?”

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Every Man, Woman and Child in Guyana Must Become Oil-Minded (Part 17)

Introduction

Today’s column looks at what is called Cost Oil, both in the petroleum industry around the world and in the Petroleum Agreements signed by Guyana with contractors. Generally the term is used to mean the expenditure which the operator can charge against income in arriving at what is called profit oil. Cost oil falls under Article 11 of the Model Petroleum Agreement which carries the broader heading “Cost Recovery and Production Sharing”. A comparison of the Model Agreement and the 1999 Agreement signed by Janet Jagan with Esso Exploration and Production Guyana Limited (Exxon) shows that the two are identical, give or take the capitalisation of a few letters!

Here are two of the opening paragraphs extracted from the Agreement.

“11.1 Subject to the terms and conditions of this Agreement, the Contractor shall bear and pay all contract costs incurred in carrying out petroleum operations and shall recover contract costs only from cost oil as herein provided.

“11.2 All recoverable contract costs incurred by the Contractor shall, subject to the terms and conditions of any agreement relating to Non-Associated gas made pursuant to Article 12, be recovered from the value, determined in accordance with Article 13, of a volume of crude oil (hereinafter referred to as “cost oil”) produced and sold from the contract area and limited in any month to an amount which equals [seventy-five percent (75%)] of the total production from the contract area for such month excluding any crude oil used in petroleum operations or which is lost. “Recoverable contract costs” means such costs as the Contractor is permitted to recover, as from the date they have been incurred, pursuant to the provisions of Annex C. Continue reading “Every Man, Woman and Child in Guyana Must Become Oil-Minded (Part 17)”

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President ought to have shown better judgement in appointment of Slowe commission of inquiry

A couple of days after Minister of Public Security Khemraj Ramjattan said some kind words to the media about Crime Chief Wendell Blanhum, the Prime Minister-controlled, state-owned Guyana Chronicle sought to discredit the Crime Chief. It did so by serialising extracts pulled from the confidential report to President Granger by his hand-picked Mr. Paul Slowe to carry out a one-man Commission of Inquiry (COI). Only the President, those very close to him, and Mr. Slowe himself would know the source of the leak. But make no mistake, if Prime Minister Nagamootoo wanted to shut down the drip, drip series by the Guyana Chronicle, all he needed to do was to pass on the instruction through one of his many mouthpieces.

With the extensive but selective disclosure by the State media, it would be irrational for the President to delay the tabling of the report in the National Assembly, and releasing it to the public. What the public will learn, and which explains why the Chronicle was so selective, is that Slowe himself found the allegation of a plot by an opportunistic and possibly unhinged complainant “unsubstantiated and therefore tenuous”. Mind you, these are the exact words used by Police Legal Adviser Justice Claudette Singh in her first note to the Police and repeated at the Commission of Inquiry, and by Blanhum at the COI. As the Americans would say, there was simply nothing there. Continue reading “President ought to have shown better judgement in appointment of Slowe commission of inquiry”

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Every Man, Woman and Child in Guyana Must Become Oil-Minded (Part 16)

Trotman’s new Agreement

Today’s column seeks to address an issue which has largely gone under the radar because Mr. Raphael Trotman, the Minister of Natural Resources has been less than forthcoming in disclosing his actions in relation to ExxonMobil since the APNU+AFC Government took office in 2015. On every occasion that Mr. Trotman was asked about ExxonMobil (Exxon) he has always answered rather evasively, and only that he had negotiated an increase in the royalty from 1 % to 2%. In my research for a Moray House presentation last Friday on the challenges and opportunities posed by the discovery of oil in offshore Guyana, I realised Mr. Trotman actually did more than that.

Some background would be useful from the following timeline.

– June 14, 1999: Petroleum Agreement and Prospecting Licence signed by President Janet Jagan as responsible Minister for approximately 600 blocks.

– Sept. 29, 2001: Exxon declares force majeure due to hostile action by Surinamese naval vessels against the CGX oil rig and drillship C.E.Thornton.

– Sept. 7, 2007 UN pronounces on Guyana/Suriname dispute.

– October 2008: Exxon lifts Force majeure status.

– October 2008: An Addendum and Extension Deed to the Petroleum Prospecting License signed, modifying the Contract Area, the relinquishment obligation, and the initial period.

– Aug. 2, 2016: Official Gazette reveals that a new agreement was signed between Guyana and Exxon and its JV partners on 27 June 2016. That document has not been released to the public or the National Assembly. Continue reading “Every Man, Woman and Child in Guyana Must Become Oil-Minded (Part 16)”