– “element of surprise” needed to ensure transparency and compliance – Global Witness
By Kiana Wilburg
Governments and their respective auditing officers must have the power to make “unannounced” visits to inspect the operations as well as the records of oil companies. It is only then one can truly ensure those entities are in compliance with the required standards of transparency and accountability.
This was the salient advice of the Global Witness, an international body that works to break the links between natural resource exploitation, corruption, and human rights abuses worldwide.
Global Witness made the said call during a review of just two of the Production Sharing Agreements (PSA) between the Government of Uganda and Tullow Oil; and Chinese National Offshore Oil Corporation and French oil major, Total S. A.
During its assessment, Global Witness found that prior to 2008, the PSAs of the agreements between those entities and the Government of Uganda, contained strict rules regarding powers to inspect.
The body noted that based on the provisions of the PSAs, the government was allowed to enter the contract area ‘at all reasonable times’ to witness operations, test equipment used to measure production and inspect assets, records and data. However, the Government must give at least ‘30 days’ notice to the company ahead of any inspection.
Global Witness said that these provisions obstruct public authorities from making unannounced visits at any time to inspect the assets or observe petroleum operations.
The anticorruption body noted that inspection covers a range of key areas for the oil sector: from financial concerns through to health and safety requirements, and environmental compliance. In all of these areas, Global Witness said that “effective inspection may well require an element of surprise to prevent crucial facts from being concealed.”
On that note, the international body said it is important for the Government to have the power to pay unannounced visits to inspect the site and records to ensure the company is in compliance with required standards. It subsequently recommended that future contracts, including the model PSA, should allow the Government to pay surprise visits to all petroleum facilities. It said too that inspection reports should also be made public.
Since this advice was given by Global Witness, the Government of Uganda has taken steps to ensure that it has unlimited access to all records for oil companies.
THE CASE OF GUYANA
According to the Production Sharing Agreement (PSA) Guyana signed with ExxonMobil, Guyana’s Natural Resources Minister, Raphael Trotman, must give the oil company seven days notice before he can visit their operations. He is also expected to carry out such a visit at his own expense.
This is enshrined in Article 9 of the contract which speaks to records, reports and information.
Article 9 (e) states: “The Minister, through duly appointed representatives, upon providing the contractor with at least seven days notice, shall be entitled to observe the petroleum operations conducted by the contractor at his sole cost and expense and at all reasonable times to inspect all assets, records and data kept by the Contractor relating to such petroleum operations. In the exercise of such rights under this paragraph the Minister shall not unduly interfere with the Contractor’s petroleum operations under this agreement.”
Trotman recently came in for criticism from several quarters for having signed on to an agreement containing the aforementioned clause. Political commentator Ramon Gaskin recently noted that he finds this clause particularly troubling.
He noted, “Generally in this country, if the tax man wants to visit your place, he visits when he is ready. It is therefore beyond comprehension why Guyana’s minister would have to give notice to an operator that is bringing up oil and gas that belongs to the state.”
Gaskin also highlighted other flaws within the contract. He was quick to point out that the APNU+AFC Government had a golden opportunity to correct a grave wrong that was committed by the PPP Administration in 1999.
During the PPP’s time, ExxonMobil was given 600 blocks. This is ten times more than what the law stipulates. The nation’s rules and regulations also specify that at every request for a renewal, the company is expected to relinquish half of the oil blocks it started with. But the PPP made an adjustment to the contract, thereby allowing the company to hold on to the 600 blocks.
In the new agreement that was signed last year under the Granger Administration with ExxonMobil, Natural Resources Minister, Raphael Trotman failed to address or redress the aforementioned problem.
Gaskin is also of the opinion that the Government in missing such an opportunity has allowed ExxonMobil and its affiliates to have control of some of the main oil-producing blocks offshore Guyana.
Gaskin was also critical of the fact that the Government is yet to release the Bridging Deed.
While the Government has released the petroleum contract it has with ExxonMobil, the Bridging Deed was one of the key documents it failed to make public. The purpose of the Deed is to replace the 1999 Agreement and Petroleum Prospecting Licence.
Gaskin reminded that former 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 Exploration and Production Guyana Limited) was granted 600 blocks instead of the 60 blocks permitted by law.
He said that the 1999 Agreement and Prospecting Licence appears to have been contained in a single package and included in it is a full description of the blocks and a map of the area allotted to the oil company. However, the 2016 Agreement merely states that a Petroleum Prospecting Licence was granted for an initial period of four years.
With the Bridging Deed not being published, Gaskin said that the Government is operating in contradiction of the nation’s petroleum laws.
Section 16(2) of the Petroleum Exploration and Production Act states: “The Minister, shall, as soon as may be practicable after a licence has been granted, cause notice of that fact to be published in the Gazette stating the name of the licensee and the situation of the land in respect of which the licence has been granted.”
With such behaviour, Gaskin argued that the Government has lost all moral ground to criticize anyone about secrecy.
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