Six -to – one is not 50-50 Part 3 – Government’s Litany of Failures
The financial, audit and regulatory weaknesses highlighted in this mini-series make for disturbing reading and raise serious concerns. Matters might have been very different had both the external auditors and the ministerial auditors taken a firmer stance on compliance with accounting standards, the Companies Act and the Petroleum Agreement. Yet these failures pale in comparison with the absence of adequate contract administration by successive administrations. As trustees of the nation’s resources, they have a duty to safeguard them for the benefit of both present and future generations – a responsibility that is consistently neglected.
While the Granger Administration has attracted most of the criticism for saddling Guyana with this deeply flawed contract, the record shows a chain of failures stretching from the 1999 Agreement signed under President Janet Jagan, through its 2016 revision, and into its ongoing administration. These are not isolated errors. They reflect a persistent pattern of weak oversight, lax enforcement, poor transparency, and an undue deference to foreign oil companies at the expense of the national interest. We now turn to the specifics.
First, the excessive acreage granted (Janet Jagan), the questionable acceptance of force majeure (Jagdeo) and the resulting licence renewal (Granger) show there is no single bad decision resulting in our current plight. On the other side of the coin is clear evidence that Exxon has been granted every concession it has sought, undermining the safeguards built into the petroleum legislation, all at the expense of the country.
Second, following the discovery of oil, Exxon secured a new agreement in 2016 as the 1999 Agreement approached expiry. Its legal difficulties were then “resolved” by a Bridging Deed that effectively transformed 2016 into 1999. In the process, Janet Jagan’s 1999 Agreement and David Granger’s 2016 Agreement became conjoined twins, politically and legally inseparable, binding both the PPP/C and the PNC-led Coalition to a petroleum regime that has disproportionately favoured the operators at Guyana’s expense.
Third, the 2016 Agreement included a commitment to pass certain tax exemptions, including a permanent tax concession. Raphael Trotman, then Minister of Natural Resources wrote in a tell-all book that he was assured by the Chief Government Whip that the Opposition Leader would raise no objection. In the event, he did not. The PPP/C is as culpable at the PNC/R in its various incarnations.
Fourth, after its return to power in 2020, the PPP/C reneged on its repeated commitment to renegotiate the 2016 Agreement and to set up an independent Petroleum Commission.
Fifth, the entire team at the Ministry of Natural Resources appears to lack the commitment, the capacity or the expertise required to oversee the Petroleum Agreement effectively. With any of these qualities, it would not permitted the persistent deficiencies in accounting, reporting, auditing and operational compliance that have marked the Agreement since its signing under the PPP/C and its re-signing under the APNU+AFC Coalition.
Sixth, the Government has been a co-conspirator in non-disclosure with regard to the gas-to-shore project. In 2024, CNOOC volunteered in its financials that it was meeting some of the expenses of that project. When this was highlighted in column #121, such a note was not repeated in 2025. The 2016 Agreement does not allow this. Any gas-related project should be the subject of a separate Agreement.
The errors of omission and commission are pervasive and systemic. They include:
A. Institutional and governance failures
i) Failure to establish an independent, professional Petroleum Commission.
ii) Failure to maintain a proper institutional separation between regulator and regulated entity.
iii) Failure to learn from the experience of other petroleum-producing countries where weak oversight, cost inflation, regulatory capture and information asymmetry have transformed a blessing into a curse.
B. Contract administration and regulatory enforcement
iv) Failure to scrutinise and transparently approve the pre-contract costs claimed by the contractor.
v) Failure to deal transparently with costs that are not automatically recoverable under the Agreement.
vi) Failure to impose ring-fencing protections when opportunities existed.
vii) Failure to enforce relinquishment provisions.
viii) Failure to ensure full compliance with statutory requirements governing petroleum operations.
ix) Unwillingness to seek adjustment of rental and other nominal annual charges.
C. Reporting, auditing and transparency
x) Failure to establish and enforce adequate standards of petroleum-sector financial reporting. Column 191 highlighted several serious deficiencies in accounting treatment, presentation and disclosure.
xi) Failure to modernise reporting and disclosure requirements as petroleum production, expenditure and revenues expanded exponentially, resulting in a regulatory framework no longer fit for purpose.
xii) Refusal or failure to publish petroleum reports and other information required under the Agreement.
xiii) Failure to conduct timely and effective ministerial audits. Not a single ministerial audit has been completed in what has become a circus of reckless incompetence. It is as though the Administration is insensitive to the financial benefits of proper audits.
D. Local content and economic participation
xiv) Delayed implementation of a wholly inadequate local content framework.
xv) Permitting the operator to develop and control major elements of the supply chain architecture.
E. Long-term fiscal and environmental protection
xvi) Failure to understand and address the fiscal consequences of decommissioning arrangements.
xvii) Failure to secure robust environmental and financial assurances.
F. Conduct in public disputes
xviii) A consistent pattern of intervening in litigation on the side of the oil companies rather than maintaining the neutrality expected of a government acting in the public interest.
To Guyanese, the greatest disappointment has been the Ali Administration’s abandonment of its promise to put Guyana first. Having inherited an Agreement it rightly condemned, it has chosen not only to defend it, but in important respects to sweeten rather than reform it – all favourable of the oil companies.
Sadly, the inescapable conclusion is that the greatest threat to Guyana’s petroleum future is no longer the Agreement itself – bad as that is. It is the Government’s continuing failure to act with courage, competence, consistency and integrity. The Granger Administration surrendered too much; the Ali Administration is on course to surrender what remains.