Category: The Road to First Oil

The March of Folly

The 2016 Agreement places greater emphasis on “gas”, or more correctly, “associated gas”, compared with the 1999 Agreement, including superficially minor, but no less significant, changes to Article 11 – Cost Recovery and Production Sharing and Article 12 – Associated and Non – Associated Gas. Neither the cap on annual cost oil – at 75% of total production – nor the equal sharing of profit between Guyana and the Contractors is affected. However, the 2016 Agreement now makes provision for the deduction of cost gas as well as cost oil from the value of production, which value does not include any reasonable own use or losses in operation.

Article 12 has been substantially amended and increased in very significant ways. Most striking is the new Article 12.4 which gives at paragraph 12 (b), to each of the three companies making up the Contractor, the right of “access to and use of any export facility or pipeline or other facilities or infrastructure built by the Government or by any wholly or partially owned Guyanese state enterprises on terms no less favorable than those of any other party having access or use of such facility.”

Even more significantly, paragraph 12 (c) gives the three companies, subject to the payment of a reasonable price and ownership interest in the facilities, the right to participate in the construction, ownership and operation of any of the types of facilities built by the Government or by any wholly or partially owned Guyanese state enterprises or by any third parties on terms no less favourable than those of any other party participating therein! Continue reading “Every Man, Woman and Child in Guyana Must Become Oil-Minded (Part 32)”

Introduction

I must start this week’s column by publicly complimenting the painstaking and excellent work done by the technical staff of Ram & McRae in comparing, line by line and word by word, the 1999 Janet Jagan’s Agreement with Esso and the Raphael Trotman’s 2016 Agreement with Esso (not Exxon), Hess and CNOOC. I must also acknowledge that the Ministry of Natural Resources published on its website the annexures to the 2016 Agreement. What it has not published is the Bridging Deed which features prominently in the Agreement, nor has the Ministry published the Prospecting Licence granted to the companies collectively as a group or caused its existence in the Official Gazette as required by law.

Those who have been following the news about oil discovery since June 2015 would have read or seen Trotman on the television with a straight and sincere face that he renegotiated the 1999 agreement by tweaking it here and there and that the only substantive change was an increase in the bonus from 1% to 2%. The comparison shows that Trotman either does not know the meaning of tweaking or – and pardon the strength of my language – he is a compulsive liar. First of all, there was no tweaking of the 1999 Agreement. The 1999 Agreement was completely replaced but to enable the oil companies to retain the benefits thereunder, a Bridging Deed was proposed by Esso and accepted by Trotman.

It would be tedious to readers and take several columns to identify the several significant differences between the 2016 and the 1999 Agreements and the annexures. A general observation between the two Agreements is that while the 1999 Agreement was with Esso, the 2016 Agreement is with three companies – Esso, Hess and CNOOC, each of which will have Affiliated Companies which can benefit from the concessions and facilities under the Agreement. It is also worth noting that none of these three entities have incorporated a domestic company and each has its registered office at the same address – 62, Hadfield and Cross Streets, the same address as Hughes, Fields and Stoby, Attorneys-at-Law.

Now for some of the key new or amended provisions. Continue reading “Every Man, Woman and Child in Guyana Must Become Oil-Minded (Part 31)”

Today’s column continues a review of the Esso/Hess/Nexen Petroleum Agreement signed on June 27, 2016 and publicly released by the Government of Guyana on December 29, 2017. Last week’s column noted a number of missing parts of the Agreement as well as what the Agreement refers to as a Bridging Deed. That Deed is defined in Article 1 as a separate Agreement signed “on or around the June 27, 2016”, to replace the 1999 Agreement and the 1999 Petroleum Prospecting Licence. Readers will recall that then President Janet Jagan signed the 1999 Agreement in violation of the Petroleum Exploration and Production Act (the Act) to the extent that the company (Esso) was granted approximately six hundred blocks instead of the sixty blocks permitted by law.

The 1999 Agreement and Prospecting Licence appear to have been contained in a single package and included a full description of the blocks and a map of the area allotted to the oil company. The 2016 Agreement merely states that on that date Minister Trotman granted a Petroleum Prospecting Licence for an initial period of four years! In other words, the whole idea of Mr. Trotman was to pretend that the 1999 Agreement never existed. Trotman has to be given credit – this takes legal gymnastics to a completely new level. Continue reading “Every Man, Woman and Child in Guyana Must Become Oil-Minded (Part 30)”

Introduction

In keeping with a recent undertaking, the Government of Guyana yesterday released the Petroleum Agreement entered into on its behalf by Mr. Raphael Trotman with American oil companies Esso Exploration and Production Guyana Limited and Hess Guyana Exploration Limited and CNOOC NEXEN Production Guyana Limited, from China. The Agreement is dated 27 June 2016 and appears to have been lodged with and assigned the number 1794/2016 by the Deeds Registry, a public repository of information, but kept hidden from the public for well over a year. This column will return to this in a subsequent column.

The purpose of today’s column is to highlight certain features of the Agreement and to draw relevant comparisons with the 1999 Agreement signed by then President Janet Jagan in her capacity as Minister responsible for petroleum. That Agreement too, was kept secret for nearly two decades until this newspaper published a copy earlier this year on its website. Except where explicitly stated, references to Agreement are to the 2016 Agreement. Continue reading “Every Man, Woman and Child in Guyana Must Become Oil-Minded (Part 29)”

Introduction

The final, belated and reluctant admission by the Government of Guyana that it received a signing bonus from ExxonMobil, seems to have caused increasing curiosity, not least because the amount disclosed is a rather odd-sounding US$18 million. While President Granger and his Foreign Minister Carl Greenidge were forced to admit the receipt of a bonus after ExxonMobil had named a figure, neither of them has volunteered critical and relevant information. Accordingly, President Granger, Vice President Carl Greenidge and Natural Resources Minister Raphael Trotman are kindly asked to provide information on the following:

a. the reason for renegotiating the 1999 Agreement and whether it was an initiative of the Government or ExxonMobil

b. the names of the Guyana negotiators and the leader of the team;

c. corresponding information on the opposing negotiating team(s);

d. the location(s) at which negotiations took place;

e. the period over which such negotiations took place;

f. whether the team had met with Cabinet and had been given any negotiating brief; Continue reading “Every Man, Woman and Child in Guyana Must Become Oil-Minded (Part 28)”