Bloomberg places spotlight on Guyana’s unpreparedness for oil wealth

Aug 14, 2019 News

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Bloomberg, one of the world’s leading news platforms, has turned its spotlight once again on Guyana’s oil sector. This time, its focus was primarily on the nation’s preparedness to receive and efficiently manage the billions of oil revenue to flow from the ExxonMobil –led Stabroek Block.
The international news site stated that Guyana is “unprepared for what’s coming.”
Bloomberg noted that while Guyana is mere months away from first oil, its petroleum laws remain outdated, the Energy Department is underfunded, new and relevant laws have not been established, a regulatory body to oversee production is virtually nonexistent, and while a Natural Resource Fund was established to save as much as $5B in revenue per year by 2025, the government is still to put forward a plan on how it will use those funds.
Further, Bloomberg notes that Guyana’s authorities are still torn over what to do with the money. The Granger government it noted, wants to use the windfall to reshape the economy, pumping money into health and education, into the country’s vast natural resources, and into rail, road, and port projects that could provide an important pathway to the Atlantic for northern Brazil.
In the midst of that, there are suggestions by some that there should be cash transfers to poor homes.
Bloomberg noted that all of this “unpreparedness” is taking place against the backdrop of confusion on when elections should be held and threats by Venezuela over Guyana’s territorial waters.
COMMENTS
Bloomberg also solicited the perspectives of several known officials. Opposition Leader, Bharrat Jagdeo, told the news agency that he is not convinced there is any caution in all the euphoria about oil.
He also registered his disappointment that after oil was discovered in 2015, the government failed to secure better terms in the contract signed with Exxon the following year.
Former Presidential Advisor on Petroleum, Dr. Jan Mangal, intimated to Bloomberg that Guyana did not get a fair deal with ExxonMobil for the Stabroek Block.
That deal saw Guyana receiving a mere two percent royalty and 50 percent of the profit oil from which it will pay the income taxes for ExxonMobil’s subsidiary, Esso Exploration and Production Guyana Limited (EEPGL), Hess Corporation, and CNOOC/NEXEN.
Bloomberg observed that unlike Dr. Mangal, ExxonMobil’s Country Manager, Rod Henson, believes that the contract was in keeping with the “high risk” that came with drilling the first well.
SARA INVESTIGATION
Bloomberg also reminded of its first report that the State Assets Recovery Agency (SARA) was investigating the award of not just the Exxon oil blocks, but all the other petroleum licences that were issued over the years.
This would mean that even the Orinduik Production Sharing Agreement (PSA), which was signed by the Granger administration with Eco Atlantic, Tullow Oil and Total, would come in for serious questioning too.
Just a few days ago, the Orinduik Block made its first discovery at the Jethro-1 well.
However, SARA’s Head, Dr. Clive Thomas did not name any company as a target as he told the news outfit that, “it’s too early for that.” He said that the anti-corruption body is still building a case.
Further, Bloomberg noted that in addition to the ExxonMobil Stabroek deal that is on SARA’s radar, so too are the contracts for the Canje and Kaieteur Blocks.
The agency noted that on March 4, 2015 former President, Donald Ramotar signed an exploration lease for the 6,100-square-kilometer Canje block with Mid-Atlantic Oil & Gas, a little-known company run by Guyanese businessman Edris Dookie.
The next day, Exxon, whose Stabroek Block abuts Canje, began drilling.
Further, on April 28, 2015 Ramotar signed over another exploration lease, this time with the partnership of Tel Aviv-based Ratio Petroleum Energy Ltd. and Toronto-based Cataleya Energy Ltd. It covers the 13,535-square-kilometer Kaieteur block, also adjacent to Stabroek.
On May 7, 2015 then Minister of Natural Resources Robert Persaud announced that Exxon had struck oil. The general election was four days later, and on May 16, 2015 David Granger, leader of the then-opposition, was sworn in as president.
Four days after that, Exxon confirmed the discovery in the Stabroek block to the stock market.
Furthermore, about a year after the leases were signed, Bloomberg reported that Exxon took a 50% stake in Kaieteur and a 35% stake in Canje and became the operator of both blocks.
All the companies involved say they have acted entirely properly.
Additionally, Ramotar told Bloomberg that he didn’t know about the Exxon find when the Canje and Kaieteur deals were signed, adding, however, “I was told that the indications were good.”
Ramotar said he welcomes any impartial, international investigation but the one being conducted by SARA is politically motivated. (See link for full Bloomberg article: https://www.bloomberg.com/news/features/2019-08-13/guyana-isn-t-ready-for-its-pending-oil-riches-but-exxon-is?srnd=premium )

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