PPP/C dancing to ExxonMobil’s tunes

There is a mad rush by American oil giant, ExxonMobil, to monetize the nine billion barrels of oil and gas resources it has discovered to date in the Stabroek Block. As a testimony to the record speed with which it wants to deplete the nation’s resources, the company revealed that it intends to have at least four oil vessels operating offshore by 2026.

Taking note of this, local and international stakeholders have called on Guyanese authorities to hasten steps to not only strengthen the country’s capacity to audit the oil giant’s costs and to properly review field development plans, but also, to quickly revise archaic oil laws along with the implementation of new ones. In the absence of these fundamental mechanisms to ensure proper governance of the sector, stakeholders have warned that Guyana would be leaving itself wide open to massive corruption and abuse by the oil giant.

During his first appearance on Kaieteur Radio’s programme, Guyana’s Oil and You, Chartered Accountant and Attorney-at-Law, Christopher Ram, shared that he is in agreement with those who have pressed for Guyana to pursue legislative reform for the sector. He said, too, that the PPP/C should have demonstrated more interest in strengthening the legal protection for the sector. Instead of doing this, it is dancing to ExxonMobil’s tunes, the same way the APNU+AFC did, expressed the Chartered Accountant. Ram said that the government’s hurry to grant the approval for ExxonMobil’s Payara project in the Stabroek block is evidence of this.

Ram said, “…APNU+ AFC and the PPP have both allowed Exxon to call the shots…ExxonMobil has been allowed to go through with a mad rush of developing multiple oil projects and we are still working with old oil laws and no depletion policy. So we are dancing to Exxon’s tunes…”
The Chartered Accountant added, “We are not in a normal situation where you can say ‘let’s take the usual time, Guyanese time, we will do this in due course.’ The reality is that we don’t have time…If we are not in control of the major sector of our economy then we are really not in control of the economy.”
Ram stressed that by now, Guyana should have had a Petroleum Commission in place or at least some movement on its establishment. He said too that there should have been stricter environmental guidelines in place.

Further to this, the transparency advocate said it is important for readers to bear in mind that the PPP was in power from 1992 to 2015. “So they aren’t novices, they ain’t just come in. They should have come in with a clear policy. They used to say ‘we gon hit the ground running.’ But its handling of the sector in the first 100 days in office has been disappointing,” Ram concluded.

STUCK AT COST AUDITS
Along with the sloth to strengthen the nation’s legislative framework, the country is still to see the completion of the report on the audit of US$460M which ExxonMobil said it spent prior to 2015 for exploration works offshore Guyana.
In September 2019, the APNU+AFC regime had awarded the contract for the audit to a UK firm called IHS Markit. Questioned on the progress of this audit a few weeks ago, Vice President, Dr. Bharrat Jagdeo, told the media that the government is still reviewing the 2015 pre-contract costs while adding that it is still to get around to auditing an additional set of pre-contract costs. ExxonMobil had said it racked up the additional costs between January and October 2016.

The Vice President was not in a position to say how much the second set of pre-contract costs totals.
He had noted, however, that the costs for projects that started being developed after 2015 such as Liza One, Two and Payara, will run into approximately US$20B while adding that Guyana needs to keep its eyes on this.
The Vice President stressed, nonetheless, that the government will ensure every cent ExxonMobil has to recover would be accounted for.

US$900M estimate
International lawyer, Melinda Janki, was one of the first persons to note that the country could be neck-deep in as much as US$900M in pre-contract costs. During one of the many panel discussions held on Guyana’s oil contract with ExxonMobil, Janki had reminded that the country has to pay US$460M in pre-contract costs. This covers the period 1999 to 2015. But there is a second lot.
Janki had said that the contract specifically states that Guyana is to pay contract costs from January 2016 to when the deal was signed on October 7, 2016.

The international lawyer had said: “The costs for the whole of 2016 were about US$583M and if you apportion it to October, you get roughly US$400M. Again, (former) Minister of Natural Resources, Raphael Trotman, has agreed for Guyana to pay this. As at October 7, 2016, Government’s attempt to sell our oil costs us US$900M.”
She added, “I have found no law which gives the minister the authority to burden the nation with this, so it is quite possible that he acted illegally.”