Category: The Road to First Oil

From Destiny to Prosperity Part 4.
Introduction

This column extends to Mr Trotman compliments and appreciation for his publication. It is not a major work and the ten chapters of the book cover just 50 pages. But he does have the distinction of being the Minister under whom Guyana became an oil producing state, and his version of the events leading up to that occasion in 2019, is a matter for current political discourse as well as the historical records.

Prior to the election of the current President, our country has had eight presidents and it is most unfortunate that none of them has had a biography or an autobiography, encompassing their presidency. The same holds true for our past Finance Ministers and foreign Ministers who have served through some momentous episodes in the country’s brief history. It would be edifying and instructive to have read the personal reflections of Burnham to Ramotar and Granger, from Frank Hope to Winston Jordan, and from Demond Hoyte to Moses Nagamootoo. Their contributions might have saved us from that national pastime of repeating the mistakes of the past.

At a broader level, If among our leaders we do not have the culture of writing, how do we encourage reading among the ordinary people?

Indeed, I take this opportunity to give a shout-out to former Ambassador Cedric Joseph, whose tome Anglo-American Diplomacy and the Reopening of the Guyana – Venezuela Boundary Controversy 1961- 1966 is a masterful work, relevant to our response to the wild threat from Venezuela. I would be pleasantly surprised if 10% of our leaders and MP’s have read that excellent 500 plus page book.

The burden

Trotman made it clear in the book that he was becoming tired “of carrying the burden of the agreement alone and wanted to speak out some more.” Apart from the interesting choice of language, in From Destiny to Prosperity, Trotman does more than speak out. He has shifted responsibility for the signing of the petroleum agreement to various persons including President Granger and Minister Greenidge; attributed responsibility for the contents of the 2016 Agreement to the GGMC, as well as seeking legal advice from that body. He does not stop there: for the tax concessions, he not only sought to share the blame with the opposition but suggests that Mr. Bharrat Jagdeo, Opposition Leader, somehow agreed to be silent on the tax concessions. As a result, the book has effectively neutralised and silenced any criticism from the PPP/C about the APNU+AF’Cs generous tax concessions.

Trotman puts a lot of store in honesty and integrity. In fact, the very first words in the book were a quote from the book of the prophet Zachariah “That you should speak the truth to one another…” It does not seem, however, that he held faithfully to the admonition of the prophet. For example, his praise of Minister Broomes and his suggestion that he and Broomes “never got an opportunity to gel”, appears to be in conflict with his having a hand in her being removed from his ministry.

Ignoring Clyde

To me, however, the greatest avoidance of the truth is the complete omission of any acknowledgement or reference to the Clyde & Co. report, which he commissioned, and which reveals that the Paper he took to Cabinet, seeking their approval of the 2016 agreement was written by an Exxon official and vice president Mr. Brooke Harris, who is the peers was one of the persons who bullied the GGMC technical team when it visited Texas.

If the PPP/C truly wanted to see how the 2016 Agreement came about, or wanted to embarrass the members of the Opposition, then the Clyde and Co report is the way to do it. unavoidable.

Trotman states in the book that he had difficulty finding a template for a production license. If that is indeed the case, then he clearly did not read the very Act and Regulations for which he was assigned ministerial responsibility. Those regulations spell out what an application for a production license should look like and what the license itself should contain. Instead, he relied on an unofficial copy “from an African state”.

Forgive the incredulity, but it is hard to believe that Trotman relied on non-lawyers for critical legal advice when he had at his disposal the expertise of Sir Shridath Ramphal and open access to the Attorney-General. Recall that it was Sir Shridath who acted as the guarantor of the Bridging Deed, the instrument used to revive the 1999 Agreement which would have finally expired in 2018. I maintain that that was not legally permissible and that’s what Trotman should have done, if he felt it expedient give Exxon a new Agreement, is that the government should have gone back to the National Assembly seeking a derogation from the requirement which allows only a single Agreement.

Sourced to the book, Column 112 identified what Trotman, with justification, referred to as achievements, of which production in about 4 1/2 years after discovery, and membership of Guyana in the Extractive Industries Transparency Initiative, are standouts. Trotman was clearly slow in moving to have an audit of the pre-contract costs and was badly advised in accepting Exxon’s incorrect total expenditure up to December 2015. But his most egregious failure was his inability to understand the difference in the risks between a pre- and a post discovery Agreement. Trotman ought too, to have moved far more quickly enforce the local content requirements of the 1986 Regulations, if in fact he did know about them.

Conclusion

To Trotman’s and the Granger’s Administration credit, their proposed independent Petroleum Commission would have been in place and the demonstration of incompetence and recklessness evident in the recent US$211 Mn. claim expense fiasco would have been avoided. It boggles the mind that we have a Forestry Commission, an independent Commission for gold, diamond and mining, a Broadcasting Authority, a Civil Aviation Authority, a Rice Development Board, a Livestock Development Authority and a Tourism Authority, while petroleum, which dwarfs all the other economic subsectors combined, is firmly in the hands of politicians, who seem unfamiliar with the basics of the sector. Not only should we not have been surprised at the fiasco in the Ministry of Natural Resources under weak ministerial leadership and political direction, but we need to lower our expectations.

My rather casual information is that very few of our decision-makers have bothered to learn from the experiences narrated in Trotman’s book. The mistakes during the APNU+AFC’s Administration were made by politicians, not technocrats. We should not be surprised if such incidents and failures recur with great cost to our country while the petroleum sector remains firmly under political control.

From Destiny to Prosperity Part 3.

Today’s column will complete the remaining chapters VI to X of Raphael Trotman’s book. Before I do so, let me acknowledge the articles carried in the Kaieteur News, written by Ms. Kiana Wilburg, their senior reporter in that paper’s inimitable style.

Chapter VI

Chapter VI begins with the signing of the first ever petroleum production sharing license in Guyana, described by Trotman as “the single most important investment in Guyana’s history since the first sugar plantation was established in the 1600s”. Again, it was President Granger who instructed him “to ensure production by 2020”, which of course, was the year for the next scheduled general elections. Trotman quotes Sir Paul Collier, development economist from the United Kingdom, exhorting the government “to get it out of the ground and monetise it as quickly as possible”. Mr Trotman was particularly pleased that production was achieved 4 1/2 years, which he claimed, not quite accurately, to be half the industry standard.

The chapter relates the anxious wait for the EPA to grant its environmental permit even as the GGMC working with Worsley Parsons, an international consultancy company, reviewed and cleared the Liza Phase One Development Plan.

Demonstrating some unawareness of Google and Amazon and the governing petroleum legislation, Chapman claimed to have experienced difficulty in conceptualising what a production licence should look like and related that another of his advisers, Ms. Jackie Khouri had to obtain an “unofficial copy” from an African state.

The chapter also relates the successful challenge in the High Court to the granting of the licence, a decision upheld by the Court of Appeal.

Chapter VII

Trotman begins Chapter VII – The Criticism & Debunking Some of the Myths, Lies and Misunderstandings Regarding Signing Exxon Contract, by referring to a death threat “in at least one known instance”, but without any details. Equally significantly, in the same (first) paragraph, Trotman strongly advocates that “As difficult and as challenging as a formal judicial inquiry would be, I still believe that one is necessary to set the record straight”.
At a personal level, the chapter relates the health challenges Trotman faced as a result of stress, while stoically bearing it “as what he signed up for”. He was neither stoic nor charitable to his so-called friends and family who he claimed were aware “of the truth”. It notes the current administration’s condemnation of the 2016 agreement as “the worst in the world”, while blatantly exploiting its massive economic gains and benefits.

Before addressing what he referred to as myths, lies and misunderstandings, Trotman emphasised that solidifying the relationship with Exxon was what he understood as the basis for a new agreement even as he goes on to state that it is neither immutable nor unshakable. But pained by the criticism of a give-away, in language worthy off strict repetition, Trotman states: “Ironically, the very initiative that was meant to preserve and protect our sovereignty, has led to us giving away our patrimony”.

The criticisms addressed in the chapter were: (1) that he acted alone in negotiating and signing the Agreement; (2) that the Exxon deal was the worst ever; (3) the signing bonus; (4) that he received money; (5) that he ignored advice; (6) the stability clause; (7) that agreement was signed in Texas; and finally, (8) that the President and Cabinet were unaware of the agreement. No. 1 is linked to No. 8, which was covered in column 111, as was No. (7). This column will briefly deal with the others, except to say that it was minister Carl Greenidge who first told him that he “needed to facilitate and accommodate”.

On the second point Mr Trotman draws on statistics prepared by Rystad Energy, Wood Mackenzie, and the IMF to show that the 2016 Agreement is “within the average for new frontier oil producers.” Mr. Trotman shows a stubborn lack of understanding and appreciation that there is an ocean of difference between a pre-discovery agreement and a post-discovery agreement. He could have gone further by telling Exxon that they were not eligible for another agreement other than a production licence for any discoveries prior to the end of the 1999 Agreement in 2018.

On No. (3), Mr Trotman described the bonus as a “veneer”, a synonym for which is a façade, a mask, a false description. The plain truth is that it was to pay legal expenses as much in the interest of Exxon as it was for Guyana. He categorically denied (4) and (5) while on (6) he argued that the Stability Clause in the Exxon agreement was no different from those of other agreements signed by the PPP/C.

Chapter VIII – Handing Over

In this Chapter, Trotman recounts his initiative to transfer responsibility from the Ministry to a new Department of Energy. Trotman relates that he wrote Granger at the end of 2017 proposing that he should assume responsibility for the petroleum sector, partly because of its importance, and partly because the task “had become a poisoned chalice”. Trotman also relates his recommendation to the President for the establishment of a Petroleum Commission, the bill for which was referred to a Select Committee.

Trotman also related his role in the creation of a Department of Energy and in heading the task force to prepare a short list of candidates for a head of that department. Dr. Mark Bynoe was appointed as the head. Not much is said in the book about the performance of the Department of Energy.

Chapter IX – Liza Destiny, Unity and Prosperity

In this chapter, Trotman refers to his prior experiences of flying on US military aircraft in 2007 and 2008. While describing those as privileges, Trotman took great pride in the helicopter ride on 21 May 2015 when he accompanied Granger and Harmon to tour the Deep Water Champion which had made the discovery announced a few days earlier.

Perhaps the most significant disclosure in this chapter is that when the Liza Unity arrived in Guyana waters in October 2021, it was welcomed by its godmother, First Lady, Arya Ally. Trotman went on to note that “there is no hiding the relationship between the First Lady and our family, and so, her welcoming the Liza Unity was providential to say the least.”

Chapter X Notable Achievements

The achievements are set more fully in Appendix E Performance Report 2015 – 2020. In the chapter itself, Mr Trotman demonstrates admirable modesty, preferring to concentrate on some of his regrets, including their inability to establish a shore base in Berbice and the retooling of the Port Mourant Training Centre. He also expressed regrets about the functioning of the Guyana Forestry Commission and the strained relationship with the mining community.

But in this review, it would be an injustice to Mr Trotman not to highlight some of those major successes including an MOU with the Petroleum Institute of Mexico for training and capacity building, and with assistance from the Commonwealth Secretariat, the preparation of a Petroleum Commission Bill, A Sovereign Wealth Fund bill and Health and Safety and Environmental Regulations.

Next week: In column 113, I will give my own take of the entire book and draw some comparisons between the APNU+AFC’s and the PPP/C’s management of the sector, and by extension, between Trotman and the current Minister.

From Destiny to Prosperity Part 2.
Introduction

Today’s column continues with a review of Chapters IV and V of Mr. Trotman’s book. In Chapter IV – Interactions with Exxon and the other Companies, Trotman relates his several meetings with representatives and officials of oil companies whose interest in Guyana ballooned following the May 2015 oil discovery announcement by Esso. President Granger was in some of those meetings, in which case Trotman played a supporting role. For all those meetings, Trotman claims reliance on the GGMC for briefings, and guidance Memos.

In respect of two specific cases – Tullow (British) and CGX (Canadian) respectively – the book notes that at those meetings, the British and Canadian High Commissioners, were present and actively participated “vocally” for specific and direct requests made by the companies, both of which were acceded to by Granger. Contrastingly, Trotman claims that he never had any meeting with US Embassy officers to discuss Exxon, or anything petroleum related.

He also noted the professional approach and conduct of the representatives of the oil companies but reserved his most generous comments for the representatives of ExxonMobil whose professionalism earned his respect.

The Chapter identifies the several local representative bodies Trotman met, including the Gold and Diamond Miners Association, women miners, forest producers and manufacturers.

To emphasise the primary role played by President Granger, Trotman cites in addition to the Tullow and CGX instructions, the President’s declaration in his inaugural address as taking responsibility for the regulatory landscape for the petroleum sector, and, importantly, in response to Trotman’s hesitancy on signing even after Cabinet had approved the Cabinet Paper on the 2016 Agreement, the instruction coming out of a meeting the President had with him and other ministers that Trotman should “sign forthwith”.

Chapter V – The Petroleum Agreement
The dramatic Presidential decree issued by Venezuela claiming all of the territorial waters of Guyana’s exclusive economic zone, including the Stabroek Block, following the announced oil discovery was, according to Trotman, the trigger for the inextricable link between diplomacy, territorial integrity and the ExxonMobil relationship.
Trotman also links the signature bonus – disingenuously claimed by him as no secret – with the assembly of a world-class legal team, supported by the best experts to present Guyana‘s case before the International Court of Justice for the defence of the country’s territoriality and sovereignty. Trotman relates as two consequential successes, the representations made by the team in November 2022, and the ruling by the Court accepting jurisdiction in the matter.

The chapter then addresses the signing of the PSA on 27 June 2016, about which Trotman claims criticisms ranged from the “sublime to the downright ridiculous”. Seeking to rebut an unspecified claim that the 2016 Agreement is the “worst of its kind”, he claims that it is no different from the 1999 Agreement signed by Janet Jagan and other PSAs signed with CGX, Anadarko, Mid-Atlantic and Ratio. Defying basic logic, Trotman fails to recognise that comparing pre-discovery agreements with those companies and a post-discovery agreement like Exxon’s, is not only like comparing apples with coal but reflects a complete lack of knowledge and understanding of the then governing legislation.

That legislation allows the Minister to enter into a single Agreement not inconsistent with the Act (emphasis added) and subject to a clearly defined time limit. All the experts in the world, and all those who he paid so handsomely, could not make legal what was legally impermissible, bridging deed or no bridging deed. Trotman claims credit for negotiating an increase in the royalty from 1%, which he incorrectly claimed had to be paid by the Government of Guyana, to 2% which is not cost recoverable.

Again, using the straw man argument, Trotman claims that many so-called experts had claimed that the 1999 agreement did not cater for the eventuality of production. It would have been honourable of him to identify those he disparagingly described as so-called experts. One did not have to be an expert to know that several of the Articles and Annexes of the 1999 agreement dealt specifically with production.

The book recalls a meeting on the margins of the United Nations General Assembly in September 2015 between Exxon’s “highest official” and the Guyana delegation at the UNGA at which they discussed Exxon’s presence in Guyana, the plan for production and the potential threats from Venezuela. While Totman was not at that meeting, he was subsequently advised that these would form the context of an expected visit to Guyana by Exxon. There is another reference to the meeting in Chapter VII in which he was told by Minister Greenidge that he “needed to facilitate and accommodate”.

In discussing the signing bonus, Trotman claims confusingly that there was little discussion about a new contract but rather about fulfilling a mutual need – Guyana’s need for financial assistance to fight Venezuela at the International Court and Exxon’s need for a certain, stable and secure contract. Exxon however argued that it had to find a way to pass the money through a legal means! Apparently, Exxon considered a signing bonus as illegal. According to Trotman, that is where the idea of a new contract and the signing bonus was raised.”

He thereafter consulted and received Cabinet’s approval, and on that basis proceeded to find a way to solidify the relationship as a development partner with Exxon.

In another of his Trotman’s straw man argument, he accuses unnamed persons of pursuing a false narrative about corruption and impropriety over the signing bonus. In fact, public concern was about the government‘s refusal to release the Agreement , and its denial of a signing bonus, with one Minister describing such an assertion as a “figment of imagination”. The chapter also discusses the Bridging Deed which was never acknowledged until the release of the 2016 PSA in the dying days of 2017. Trotman discloses that Sir Shridath Ramphal played a prominent role in the Deed but does not disclose Ramphal’s roles as Escrow Agent and effective guarantor of the 2016 Agreement.

Trotman acknowledges that Cabinet approved the signing of the new agreement on the basis of a Cabinet memo containing “a brief on all of the main clauses that required approval”. However, even after such approval, he relates that he and his Legal Officer “harboured some discomfort about signing” , which he claims, “did not go down well with Exxon top brass”. This caused an Exxon team to rush down to Guyana to meet with the President and some unidentified ministers from which the instruction was: Proceed with the signing of the Agreement forthwith.

The chapter discloses that prior to the tabling in the National Assembly of the Order to approve the tax concessions specified in the Agreement, he had been informed that the Leader of the Opposition had been “briefed” on them and “would offer no objection.” Trotman claims that unanimous approval was granted on 8 August 2016, more than fifteen months before the Agreement was released to the public. It reports too, that the same persons had cautioned him about disclosing too much on the specifics of the June 27 agreement, except that it had been signed and to mention “some of the provisions.”

As column 110 noted, the book also included the Minutes of a meeting of the Parliamentary Sectoral Committee on Natural Resources, held on 18 May 2018 comprising chairman Mr Odinga Lumumba and eight members, none of whom seemed particularly familiar with the Agreement or the relevant legislation. At the next Cabinet meeting, Trotman was chided for being too candid about the facts and providing “too much information to international observers and detractors.”

The chapter ends on the sour note that Trotman was becoming “weary of carrying the burden of the agreement alone and wanted to speak out some more”. Perhaps, the book has given him that belated opportunity.

From Destiny to Prosperity Part 1.

Introduction

Today’s column begins the review of Trotman’s book From Destiny to Prosperity – the names of two of the first three Floating Storage and Production Offshore vessels (FPSO) in the petroleum operations conducted by the Contractors in the Stabroek Block, the other being Unity. The book explains that the choice of names was intended to reflect Trotman’s assessment of Guyana’s trajectory as a petrostate.

The book has 10 chapters and six appendices over 187 pages, each chapter representing an “individual episode in time and circumstance”. Appendix C is a report submitted to Trotman by Mr. Newell Dennison, the head of the GGMC, of a meeting he and his deputy attended in Texas at Exxon ‘s offices, a couple months before the signing of the 2016 Agreement. While the meeting was intended to be a technical meeting, Exxon not only raised contractual matters, but it also resisted reasonable points raised by the Guyana team. Whether or not it had any instructions to do so, the report by the GGMC team suggests that the team did not clarify that contractual matters were not part of the team’s remit.

Appendix D reproduces a statement by Minister of Foreign Affairs Carl Greenidge delivered on 14 December 2017 in the National Assembly on the issue of the signing bonus. Trotman’s narrative on the signing bonus is addressed more fully later in this review. Interestingly, Greenidge’s speech was delivered two weeks before the government finally released the 2016 Agreement, confirming a signing bonus. That statement is unsparing of this columnist, no doubt for having first exposed the payment of a signing bonus, two months earlier. Because this review is neither about Greenidge nor me, I leave the matter there, for now.

Motive

In a nine-page Preface to the book, Trotman sets out as his motive for writing it, the need for Guyanese to hear from him definitively on certain matters, that he does not set out to apologise but to explain, to give his side, his context, and even his defence to the “lies, half-truths, misunderstandings, misinformation and vile accusations that have been uttered”. In more restrained language, he explains that much of what he wrote is meant to provide the context surrounding the signing of the 2016 Production Sharing Agreement.

Describing his twenty-eight years in public life as both exciting and gut-wrenching, Trotman praises Presidents Hoyte and Granger for their patriotism, leadership and greatness. He explained “The Bahamas encounter” as a brief conversation in that country with Granger in which the latter set out his vision for Guyana and they shared their collective hope of a change from the “dark, divided and dystopian body politic of Guyana”.

Trotman also recalled that at a meeting at the Public Buildings after the 2011 election results had been declared, Granger proposed to Donald Ramotar, president-elect, that all the parties should come together and form a government of national unity. Ramotar recalls such a meeting but not the specifics of such a call.

Trotman acknowledges two mistakes by him that can prove fatal in politics – expecting others to come to his defence, and his failure to respond to critics.

Chapter 1: Becoming a Minister

In chapter one, the writer traces his political pedigree to his maternal grandfather and recounts his own career in public service covering city council, Member of Parliament, Speaker of the National Assembly and leader of the Alliance for Change, which in coalition with the A Partnership for National Unity won the 2015 elections against considerable odds. Describing Guyana’s democracy as poisoned by ethnic tensions and suspicions, Trotman considers himself as fortunate and blessed to have worked with two presidents, Desmond Hoyte and David Granger, who both possessed qualities of humaneness and greatness and from whom he learnt valuable lessons. While crediting David Granger’s integrity, intellect, and deep love for country, he stated that Granger was definitely not a politician.

Trotman acknowledges that it was Moses Nagamootoo who as a fellow UG student, first stirred his latent interest in politics. He also claims that despite having successfully managed the 2015 alongside Joe Harmon, his name was not submitted for a ministerial position under the terms of the Cummingsburg Accord between the APNU and the AFC. Instead, he was tipped to be named as an advisor and then, to his confusion and surprise, he learnt via a telephone call from a secretary that he would be named a cabinet minister with responsibility for the “national patrimony”, a term no doubt the brainchild of President Granger. Yet, by then, he had no call or conversation with the President, and it was Trotman who subsequently asked for a meeting with Granger.

It was only after several months of confusion that he learnt that he was also be responsible for governance issues, part of which was the writing of the code of conduct for ministers and members of cabinet. In a subsequent cabinet reshuffle, the portfolio of governance was transferred to Prime Minister Moses Nagamootoo while Trotman was re-designated Minister of Natural Resources, handing him what he describes as the “poisonous petroleum chalice.”

Chapter two: The Vision

In this , Trotman sets out the APNU+AFC’s vision for the natural resources sector which he credits entirely to President Granger. Granger had defined the Ministry’s role to be “ensuring the responsible exploration and exploitation of natural resources, land management, rivers and the sustainable mack, management of mines, forests and other natural assets.” In a nod to the political culture of Guyana, he discloses that he lost friends and valuable family relationships because of his inability to grant jobs to people without requisite qualifications and those who sought preferential treatment for the award of contracts and mining and forestry concessions.

Trotman claims as two areas of success Guyana’s signing on to the Extractive Industries Transparency Initiative (EITI) for which he gave kudos to Mike McCormack, the GHRA head, and the Youth in Natural Resources programme. In respect of the EITI, he expressed the belief that there were many then who opposed transparency, some of whom “still linger” and are now “more emboldened.” Such serious accusations without examples do an injustice to those who supported transparency.

Chapter 3: Putting Systems in Place

The writer lists the several government agencies for which he had ministerial responsibility, including Forestry, the Gold Board, the GGMC and the EPA, described by him as a” massive responsibility, and admittedly, unwieldly at times.” Of these, he described the GGMC, under which there has long been a Petroleum Unit, as the most difficult to oversee, functioning “almost with a mind of its own”. While claiming that senior officers of the GGMC were capable, he makes the not-too-subtle point that they were also suspicious of, and marginally resistant to change. Trotman also relates his concerns about rumours of impropriety in the GGMC, citing a specific example when he threatened the head of GGMC of calling in the Police over reports of corruption by “some misguided and unscrupulous GGMC officer.”

Another major challenge identified by him as “managing” the miners – over the tension between large and small miners, insufficient land for mining, raiding and illegal mining, and pollution and environmental degradation. The waning influence of the big miners following the discovery of oil was not in any way helped by President Granger’s description of the mined landscape in the hinterland as “abscesses”, and the efforts to assist small miners owing to the influence of Minister Simona Broomes.

Trotman recounts fewer problems with forestry and the gold and diamond sectors, noting the independence he gave chairpersons Mr. Stanley Ming at the GGMC, Ms. Jocelyn Dow at the Forestry Commission and Ms. Jocelyn Williams and later, Mr. GHK Lall at the Gold Board.

Next week’s column will focus on Chapters 4 and 5 – Interaction with Exxon and the 2016 Production Sharing Agreement.

The Shell Company

Introduction

It has been several months since column 108. Yet, when I told a friend that I intended to publish approximately eight columns over the next few weeks, his immediate reaction was the question: what will you say that you have not addressed in the one hundred and eight columns and dozens of letters over the past four years? Not sure what my answer was.

More recently, I have penned letters in the press raising questions about the conduct of Esso, Hess and CNOOC, the three contractors of the Stabroek Block, as well as about their financial reporting. A specific concern I have are the amounts paid to Esso Exploration and Production Guyana Limited (EEPGL) by Shell Exploration and Production Guyana Limited (2009 and 2011) and then by Hess and CNOOC (2014), and how these were accounted for by Esso Exploration and Production (Guyana) Limited, the Contractor under the 1999 Agreement. Until this is cleared up, there will always be concerns about the integrity and propriety of the accounting records of Esso (now ExxonMobil Exploration and Production (Guyana) Limited). My understanding is that those companies made payments to Esso abroad while the amounts paid might have found their way back to Guyana as costs in the local books via inter-company transactions. If this is so, and there are no consequences, then what’s the point of research and writing? I will persist, for the while.

Beginning with today’s piece, over the next few weeks, this Column will address the conduct of another earlier Stabroek Block partner – Shell Exploration and Production Guyana Limited. Like Esso, Hess and CNOOC, Shell chose the branch model to operate their interest in the Stabroek Block. Perhaps because Shell was in and out of Guyana before the discovery of oil, it has attracted very little attention, including by me. I hope that today’s column goes some way to address that omission.

Then in the weeks following, I will do a review of a recent book From Destiny to Prosperity by former Energy Minister Raphael Trotman giving a narrative on his tenure in that capacity. The book also includes the minutes of a meeting of a Parliamentary Select Committee and extracts from the Hansard which dealt with the 2016 Petroleum Agreement. What stands out in the book was Trotman’s rationalisation of the 1999 Agreement. That will make the PPP/C happy.

I will follow up with a review of the new petroleum legislation – the Petroleum Services Act – which replaces in their entirety the Petroleum Act of 1939 and the 1986 Petroleum Explorations and Production Act. It is worth noting at this stage that the new legislation does not affect the 2016 Agreement, or the regulations made under the 1986 Act as these are specifically “saved”, to use the legal term to describe a situation where subsidiary legislation made under a repealed Act is preserved.

Back to Shell

The Shell company – pun intended – was registered as the branch of an external company in 2009, the same year in which it acquired from Esso, a 25% stake in the Stabroek Block. Then in 2011, it acquired a further 25% making it an equal partner with Esso in the Block. In violation of accounting requirements and legal principles the Guyana Esso branch never accounted for the moneys it received from Shell, for its first 25% or the subsequent 25%.

But here is where the situation gets very messy and shows poor oversight. Shell’s investment in the Stabroek Block extended from 2009 – the year in which it registered in Guyana – to 2014, when it ended its participation in the Block. An application for cancellation of its registration was filed in November 2018. Yet, there is not a single annual report or financial statements for the years 2009 – 2018 in the records of the Commercial Registry as the law requires.

It is a stretch to believe that the company would not have known of its filing obligations under Guyana laws. The question then is whether this was a deliberate decision on the part of Shell, and why the Commercial Registry never picked up this grave omission over a period of several years. The question also must be asked whether Shell ever prepared financial statements or filed tax returns as required under tax laws of Guyana. While the Guyanese public would never know the motive behind the decision not to comply, such non-disclosure has facilitated a more serious issue – it did not have to account for the payments it made to Esso for its 50% stake in the Stabroek Block.

The irony of it all, an affiliate of the same Shell branch was contracted in 2019 to sell Guyana’s first three oil lifts!

Conclusion

It is known that after questions were raised about the 2016 Agreement, then Minister Raphael Trotman commissioned an independent study to investigate the circumstances leading up to its signing. The current administration too, has been confronted with several questions concerning the conduct of the oil companies, many of which did not arise under its watch. Trotman has said he would be willing to appear before an independent and competent Commission of Inquiry. Given the PPP/C’s commitment to “better contract administration” it should not hesitate to set up such a Commission from which so many valuable lessons can be learnt.

Next week: From Destiny to Prosperity Part 1.