Category: The Road to First Oil

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)”

New Account

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)”

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)”

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)”