Category: The Road to First Oil

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Every Man, Woman and Child in Guyana Must Become Oil-Minded (Part 64)

Introduction

Figures contained in the 2017 financial statements of Esso Exploration and Production Guyana Limited indicate that the three-party set up of Esso, Hess and CNOOC Nexen will spend well over five hundred billion dollars ($500,000,000,000) up to December 2019. The three companies signed a sweetheart deal with then Minister of Natural Resources Mr. Raphael Trotman one year after Esso’s parent ExxonMobil had announced the world’s largest oil find in 2015.  

Put another way, if US$10 (approximately $2,100) of this sum is applied to every barrel of oil, it will require over two hundred and forty million barrels of oil before the full sum is recovered. On the more positive side, once these costs, which are recoverable costs under the 2016 Agreement,  are recovered, only ongoing capital expenditure and operating costs will be charged to cost oil for the remaining 4 billion barrels of oil.

Continue reading “Every Man, Woman and Child in Guyana Must Become Oil-Minded (Part 64)”

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Every Man, Woman and Child in Guyana Must Become Oil-Minded (Part 63)

Introduction

It has been nearly a month since the last column appeared on October 19 under the title Complex for the White Man, Disdain for Locals. Recent developments have lent an aura of prescience about that column as we witnessed and contrasted the arrogance and unlawful behaviour of Minister David Patterson to the Berbice Bridge Company Limited, to the “softly, softly”, overly respectful attitude to ExxonMobil by the Government. The Government’s apparent obsession with the Ramroop Group’s involvement in the Bridge Company blinds it to the fact that there are more than twenty other domestic investors in that company, including Pension Schemes, Trade Unions, financial institutions and commercial operators. In fact, the single majority interest in the Bridge Company is held by the National Insurance Scheme while the Chairman of the Board of the Bridge Company is the Chairman of the NIS!

Of course, I believe that the Company was ill-advised to announce its unrealistic, uneconomic and unpopular toll increase. And of course, I believe that there were features of the Bridge Concessions that were too generous to the bondholders who were paid interest which was difficult to sustain and which in fact appears to have been a major contributor to the cash flow difficulties which led to the government’s intervention. I believe too, that the request by the directors for a two decades extension to the concession period was unnecessary, and played into the hands of the Government which has failed to keep its promise to drastically reduce tolls. Continue reading “Every Man, Woman and Child in Guyana Must Become Oil-Minded (Part 63)”

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Every Man, Woman and Child in Guyana Must Become Oil-Minded (Part 62)

Introduction

During the recently-concluded United Nations General Assembly in New York, USA, the Guyana Delegation led by Foreign Minister Carl Greenidge facilitated a meeting between the Governor of the Bank of Guyana and representatives of Merrill Lynch, the investment arm of the Bank of America Corporation which had expressed an interest in Guyana’s proposed Sovereign Wealth Fund. It was not so much that Greenidge facilitated the meeting, or that Finance Minister Winston Jordan would most likely have also attended had his diary permitted, but rather the enthusiasm and expansiveness with which Greenidge subsequently reported on the meeting. Greenidge at a Press Conference on his return to Guyana, promoted the banker’s “variety of expertise in the setting up of such funds, and providing options for collaboration that they can offer.”

But Greenidge was not done yet. He touted Merrill Lynch’s capacity and extensive experience in the management of the equivalent of sovereign wealth funds, reminding the Guyanese media that Merrill Lynch was no stranger to Guyana and that when he was the minister of finance in a previous government, the investment division facilitated the Bank of Guyana and the Bank of America working together. Such gratuitous high level endorsement in an emerging oil economy must be anyone’s dream.

Yet, at home, Jordan and Co have crudely and blatantly refused to engage and listen to Guyanese’s concerns and recommendations on the petroleum contract as well as the Natural Resources Fund proposal. But yes, of course, Merrill Lynch is big, it is powerful and it has that colour for which we all seem to have a pronounced complex. Continue reading “Every Man, Woman and Child in Guyana Must Become Oil-Minded (Part 62)”

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Every Man, Woman and Child in Guyana Must Become Oil-Minded (Part 61)

Introduction

In an advertisement appearing in the national media yesterday, the Ministry of Natural Resources, on its own behalf and that of the Government of Guyana, invited expressions of interest by Consultants desirous of providing services to the Project Execution Unit, presumably of the Ministry, to “conduct an audit of the Recoverable Contract Costs as called for in the signed Production Sharing Contract(s).” It also requires the successful person or Firm to provide on-the-job training to the staff of the Guyana Revenue Authority (GRA) and the Office of the Auditor General (OAG) on cost recovery auditing, “with a particular focus on value for money.” Continue reading “Every Man, Woman and Child in Guyana Must Become Oil-Minded (Part 61)”

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Every Man, Woman and Child in Guyana Must Become Oil-Minded (Part 60)

Introduction

Following last week’s call for a Commission of Inquiry into the Petroleum Sector, more than a handful of individuals approached me enquiring whether the call was serious and what would be the expected outcome. After the spate of Presidential Commissions of Inquiry out of which practically no action was taken, it is not surprising that many persons are cynical about another Commission of Inquiry (COI). My response to those persons was to ask whether they are satisfied about the controversy which surrounds this nascent but critical sector, which will soon dominate Guyana’s economy and indeed all aspects of life in Guyana in as little as ten years.

Nor can anyone be satisfied about the uncertainty surrounding any depletion policy and the rate of extraction of petroleum under the 2016 Petroleum Agreement signed with Esso, Hess and CNOOC. They must surely worry about the implications of the quadruplicating of the country’s petroleum reserves following further discoveries by the three and the nearly dozen or so other oil companies that have been issued with Prospecting Licences. Continue reading “Every Man, Woman and Child in Guyana Must Become Oil-Minded (Part 60)”