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April 20, 2018April 20, 2018

Every Man, Woman and Child in Guyana Must Become Oil-Minded (Part 41)

Introduction

Regulations made under the Petroleum Exploration and Production Act require the application for a prospecting licence to be accompanied by a statement giving particulars of the applicant’s financial status while in the case of a production licence, the application must give full information as to the applicant’s financial status. The Minister has extensive powers under the Act and the Regulations to request such additional information as he thinks necessary or to issue licences with conditions attached.

The applications are not published documents but the Act requires the Minister to cause notice of the grant of a licence stating the name of the licensee and the situation of the land (sic) in respect of which the licence has been granted. Whether the framers of the 1986 legislation did not consider that licences may be granted for off-shore exploration is unclear but it cannot be that only land-based licences require publication. Let us leave that technical matter for a while and return to the financial capacity of the licence holders.

We know that what our local media continue to dub the ExxonMobil Petroleum Agreement of 2016 actually has three contractors – Esso Exploration and Production Guyana Limited (Esso), CNOOC Nexen Petroleum Guyana Limited (CNOOC) and Hess Guyana Exploration Guyana Limited (Hess) – all incorporated in offshore tax havens and operating in Guyana as branches of the offshore companies. We know too that the two non-Esso companies which hold 55% of the interest have appointed Esso as the Operator. Continue reading “Every Man, Woman and Child in Guyana Must Become Oil-Minded (Part 41)”

April 13, 2018April 15, 2018

Every Man, Woman and Child in Guyana Must Become Oil-Minded (Part 40)

Introduction

In the course of his presentation of Budget Speech 2018 delivered on November 27, 2017, the Minister of Finance announced that the Government of Guyana would be partnering with the Islamic Development Bank (IsDB/the Bank), through the Malaysia Agricultural Research and Development Institute (MARDI), to update the expertise and technology in rice production through a Reverse Linkage Project to the tune of US$863,000. The Bank did not feature in the exchanges in the Budget debate so it was with more than a little surprise that the local media, citing a speech by the Minister to the annual meeting of the Bank, reported that the Bank would be lending roughly US$900 million to Guyana, its newest member.

It would have been, after all, the largest single loan ever taken by this country, and on a per capita basis, the largest loan ever extended to a member country by the Islamic Development Bank. The Ministry of Finance later walked back on that statement, clarifying that it was rather a “resource envelope of US900M that is potentially available from which the Government of the Cooperative Republic of Guyana can borrow.” The ministry’s clarification said that during the period 27-29 November 2017, the IsDB mounted a mission to Guyana to develop a medium term work plan for the period 2018- 2022, setting out a pipeline of projects that the Bank can support over the next five years.

As Guyana moves to First Oil – and let us face it, into general and regional elections – the temptation to spend will be almost irresistible, posing a risk to the much anticipated Sovereign Wealth Fund (SWF). That risk is real and cannot be discounted. So far, the discussion on the SWF has largely been theoretical and centred on possible models. In practice, the SWF has to take a whole host of factors into account, including the country’s recurring deficits which are financed by loans; the deficit in its infrastructure; future revenue gains and losses; commodity prices including that of oil; and citizens’ expectations which continue to rise. Continue reading “Every Man, Woman and Child in Guyana Must Become Oil-Minded (Part 40)”

March 28, 2018April 3, 2018

Address to the 6th triennial Conference of the Federation of Independent Trade Unions of Guyana (FITUG)

Chairman, Leaders of the Trades Union Movement, workers, officials, members of the media, ladies and gentlemen.

Thank you Mr. Chairman.

When I was invited by letter to deliver the feature address and declare open this 6th. triennial Conference of the Federation of Independent Trade Unions of Guyana (FITUG), I hesitated particularly as I looked at the calibre of my predecessors for the last three Conferences. In 2009, it was Senior Counsel Ashton Chase who is arguably the most knowledgeable person in Guyana in the law and practice of labour matters. He was followed in 2012 by Mr. Donald Ramotar, then President of Guyana and three years later by Dr. Nanda Gopaul who has had a proud and active association with the labour movement and more particularly with the National Association of Agricultural, Commercial and Industrial Employees of which he was once the General Secretary.

I accepted, so I must deliver, whatever my concerns, reservation and nervousness.

In this presentation, if you do not shout me down earlier, I want to deal with some of the troubling issues confronting the labour movement and the country. The order of topics is sugar, next I will speak briefly about oil and successive governments’ failure to protect the patrimony of the country and the interest of the people. I will then turn attention to the disunity and leadership crisis in the labour movement, government and labour, and threats to democracy. Continue reading “Address to the 6th triennial Conference of the Federation of Independent Trade Unions of Guyana (FITUG)”

March 23, 2018March 27, 2018

Every Man, Woman and Child in Guyana Must Become Oil-Minded (Part 39)

Introduction

In this the 39th column I wrap up the comparison of the 1999 and 2016 contracts by looking at Annex D which is completely new in the 2016 Agreement. Annex D is derived from Article 21, addressed in Column 34 and containing a non-exhaustive list of nearly 250 classes of items which can be imported under the Agreement. As pointed out earlier, this Annex constitutes a carte blanche dispensing with any requirement for approval by the petroleum regulators. These items are now deemed approved and certified by the Chief Inspector, an office which Minister Trotman has failed to fill after nearly three years. What more can one say about Trotman and the APNU+AFC Government! For one thing, that he was being at least disingenuous earlier when he described the 2016 Agreement as a tweaked version of the 1999 Agreement.

There have been roughly two dozen columns comparing the 1999 and the 2016 Petroleum Agreements. Of course, an absolutely total comparison has not been possible because both the PPP/C and the APNU+AFC Governments have withheld important documents from the public. Even if the Granger Administration was forced into releasing the 2016 Agreement, they deserve a little credit for doing so. At the same time, they have been stubbornly resistant to releasing the Bridging Deed and have also withheld the 2016 Prospecting Licence and the 2017 Production Licence. On the other hand, the PPP/C in sixteen years kept the 1999 Agreement secret as well as the 2008 Addendum. Continue reading “Every Man, Woman and Child in Guyana Must Become Oil-Minded (Part 39)”

March 16, 2018March 16, 2018

Every Man, Woman and Child in Guyana Must Become Oil-Minded (Part 38)

Introduction

Column 37 which appeared last week dealt with the classification of costs and as indicated there, attention now turns to what Annex C describes as Pre-contract costs. In this regard, a major insertion in the 2016 Agreement which has aroused considerable curiosity relates to an amount of US$460,237,918 by the Contractors for pre-Contract costs incurred under the 1999 Agreement. This is included in section 3.1 of Annex C “Costs Recoverable Without Further Approval of the Minister”. This is also not the entire sum for pre-contract cost but represents only those costs claimed to have been incurred up to December 31, 2015. Additionally, the 2016 Agreement also provides that cost incurred between January 1, 2016 and the Effective date of the Agreement constitute part of the cost of petroleum operations. All that was required in the latter case was for the Contractor to notify the Minister of those costs no later than October 31, 2016. The Minister had six months to agree such costs.

The separation of the two costs suggests that the US$460,237,918 is final while in the case of the costs incurred between January 1, 2016 and the effective date, the time for any challenge was April 30, 2017. Continue reading “Every Man, Woman and Child in Guyana Must Become Oil-Minded (Part 38)”