Every Man, Woman and Child in Guyana Must Become Oil-Minded (Part 27) Dissembling on the signing bonus

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On the day this column appeared last week, the press in Guyana, in an outstanding case of enterprising journalism, confirmed that Guyana had indeed received a signing bonus from ExxonMobil. The evidence was out – a letter from the Finance Secretary, a Permanent Secretary equivalent, in the Ministry of Finance to the Governor of the Bank of Guyana with the caption Signing Bonus granted by ExxonMobil – Request to open Bank Account.

But if anyone thought that the trail of obfuscation, deception and outright lies peddled since the fourth quarter of 2016 had come to an end, a new cycle began. First of all, even after the publication of the letter, Government spokespersons did not disclose the sum received which eventually came out of ExxonMobil after its country manager was collared at one of the company’s outreaches.

The saga involved the Ministers of Finance and Natural Resources, the President himself, the Foreign Minister and the Minister of State. Outside of the government, the local anti-corruption body Transparency Institute, Justice Institute of Guyana, the former Auditor General of Guyana and the independent dailies were appalled to find that the APNU+AFC had taken a dangerous road of concealment with ever more outrageous and inane excuses being made by key government spokespersons. Continue reading Every Man, Woman and Child in Guyana Must Become Oil-Minded (Part 27) Dissembling on the signing bonus

Statement of ExxonMobil’s Signing Bonus

In an ironic twist, the dam of eighteen months of denial and obfuscation concerning the payment of a Signing Bonus by ExxonMobil to the Government of Guyana broke apart one day before the UN declared International Anti-Corruption Day. The forced admission by the Government is a shocking revelation of a conspiracy to deceive the people of Guyana about billions of dollars, involving a galaxy of ministers, including four of five Granger’s famous Quintet plus one, and involving two key ministries and their Ministers. In possible exculpation, one of the Ministers could possibly say that he was equally lied to by his colleagues about the origin and purpose of the money. But such is that damning path to corruption that injects the resource curse virus into the bloodstream of third class politicians managing third world petro countries.

There are immediate and longer term implications of this saga from which Guyana may forever suffer. For the immediate, it means that Article 216 of the Constitution of Guyana has been knowingly violated; that critical information contained in the Estimates of Expenditure now being considered by the National Assembly is inaccurate, incorrect and meaningless; that the 2016 financial statements of the Government and of the Consolidated Fund are for 2016 similarly deficient; that the Report of the Auditor General thereon is inapplicable and that auditing standards applied by his Office requires him to withdraw his report; that the financial statements and the auditor’s report of the Bank of Guyana for the year 2016 face the same jeopardy; and that this web of deception has ensnared high level officers of the Ministry of Finance, the Geology and Mines Commission and the Bank of Guyana, including the Chairman of its Audit Committee Mr. Anand Goolsarran. Continue reading Statement of ExxonMobil’s Signing Bonus

Every Man, Woman and Child in Guyana Must Become Oil-Minded (Part 26)

Stability of Agreement Clauses in Oil Contracts

This Column touched earlier on what the Model Petroleum Contract describes as a Stability Clause, the objective of which is to provide assurance to international oil companies that they will be protected from any variation in fiscal or economic policies by governments for a period of as much as thirty years. Here is how the Model Agreement describes that clause:

Government shall not, following the Effective Date, unilaterally increase the contractual obligations of the contractor under this Agreement or diminish the contractual rights of the Contractor hereunder as such obligations and rights exist as of the Effective Date.

If any level of government, promulgates new or amended laws, decrees or regulations, which negatively impacts the contractor’s economic benefits, the Parties shall promptly make revisions and adjustments to this Agreement as necessary to maintain the contractor’s economic entitlements at the level existing as of the effective date.

Continue reading Every Man, Woman and Child in Guyana Must Become Oil-Minded (Part 26)

Every Man, Woman and Child in Guyana Must Become Oil-Minded (Part 25)

Kudos, Cabinet

Notwithstanding its extreme reluctance to release the contract signed by Natural Resources Minister Raphael Trotman with Esso Exploration and Production (Guyana) Limited and two Joint Partners some eighteen months ago, Cabinet deserves credit for its decision to make the contract public in December. All the more because we are told that experts had advised Trotman that it would be a breach of the law for the Government to do so. I am sure that the Government will not regret this decision as there really is nothing to lose. In fact, Guyana will be joining a growing list of countries which make their extractive contracts and licences public.

The Executive Summary of a report Past the Tipping Point? published earlier this year by Natural Resource Governance Institute and written by Don Hubert and Rob Pitman concluded that it is becoming increasingly normal for member countries of the Extractive Industries Transparency Initiative (EITI) to disclose the contracts and licenses that lay out the terms for resource exploitation. No doubt, Guyana, which was recently admitted to membership of EITI, will be much more comfortable at EITI meetings when the question of contract disclosure is being discussed. In fact, Guyana will be joining a group of eleven countries which discloses its contracts despite having no statutory obligation to do so. Continue reading Every Man, Woman and Child in Guyana Must Become Oil-Minded (Part 25)

Every Man, Woman and Child in Guyana Must Become Oil-Minded (Part 24)

In Part 23 this column noted that Indonesia which had taken a lead role in the Production Sharing Contract (PSC) had moved to the Gross Sharing Production Sharing Contract. In fact, in 2015 Mexico and India are the two other countries which have migrated to similar systems, India after considerable debate. That does not mean that there will be a migration wave: just that in the industry nothing stands still. Today’s column looks at a much more basic or preliminary issue involving the petroleum sector – how contracts are in fact awarded.

The real issue is whether there is a policy for the sector to start with. The APNU+AFC was confronted practically from day one with the news of a major oil find. If they were unprepared it would be most natural, even if Robert Persaud, the Minister of Natural Resources and the Environment had briefed the new Minister. Two years on however, there is no policy, no new primary or secondary legislation and one wonders whether and when Minister Trotman will introduce new legislation. In fact, the Minister continues to behave as if he is still to learn the very basics of the sector although this does not suggest that his job is at risk. His two major achievements to date are the signing of a new Petroleum Agreement with the ExxonMobil subsidiary and causing Guyana to become a member of Extractive Industries Transparency Initiative (EITI). Continue reading Every Man, Woman and Child in Guyana Must Become Oil-Minded (Part 24)