Latest update April 19th, 2024 12:59 AM
Nov 01, 2020 News
Kaieteur News – Before the world’s most prominent oil companies enter partnerships for exploration and production, it is common practice that they would execute a thorough due diligence.
In the case of ExxonMobil and Hess Corporation, both are required to conduct due diligence on potential partners so as to protect shareholders from exposure to corruption and other areas of risk.
In fact, ExxonMobil’s 2019 Anti-Corruption Legal Compliance Guide categorically states that before entering into an agreement to acquire assets or form a joint venture, “it is very important to consult with the Law Department for advice on appropriate due diligence and anti-corruption safeguards to mitigate this risk. In some cases, prudent due diligence will be extensive, and may add significant, but unavoidable delay and expense to the project.”
Hess Corporation is also a stickler for conducting due diligence on potential joint venture partners. In spite of the having such business principles, both parties still ignored obvious red flags that plagued the award process for the Kaieteur and Canje Oil Blocks and they subsequently farmed into both blocks.
Over the last few weeks, Kaieteur News would have published several installments in its “Fleecing of Guyana” series, which exposed the numerous red flags in the award of the two offshore concessions by former President, Donald Ramotar.
In the case of the Canje Block, it was awarded by the Donald Ramotar administration on March 4, 2015 days before the elections, to local company, Mid Atlantic Oil and Gas, which was incorporated in 2013 by Hewley Nelson, a management professional and Nicholas Chuck-A-Sang, a geologist.
Dr. Edris Kamal Dookie, who was not officially a director at the time the company received the block, came on later and is the sole shareholder.
A mere six weeks after being in possession of the block, Mid-Atlantic sold some of the stakes in the block to a company called JHI.
This was executed on May 15. It is important to note that Mid-Atlantic and JHI did not have any assets besides Canje; they had no proven track record of exploration, and they did not even have the finances to develop any resources if found in the Canje block.
In fact, JHI which holds a 17.5 percent stake in the block is an industry unknown whose financial health remains hidden from scrutiny as it is registered in the British Virgin Islands (BVI). Industry experts have warned that BVI is among the world’s most notorious tax havens, hence when companies flock to such territories to keep their financial dealings a secret, it should raise eyebrows.
After acquiring the block, Kaieteur News would have reported that Exxon subsequently farmed into the Canje in February 2016, becoming the operator with 35 percent of the shares.
The sum Exxon paid for its share is unknown.
In February of 2018, JHI and Mid-Atlantic also struck a deal with Total, which resulted in the French exploration and production company having a 35 percent stake. The Natural Resource Governance Institute (NRGI), a reputable corruption watchdog, has noted that the quick flipping of blocks without having done substantial work is as a major red flag, which warrants a probe.
With regard to the Kaieteur Block, similar red flags were found by this newspaper. In its ‘Fleecing of the Guyana’ series, Kaieteur News showed that former President Ramotar had awarded the offshore concession April 28, 2015 – just two weeks before the 2015 General and Regional Elections.
The former Head of State claimed he had done so on the advice of former Minister of Natural Resources, Robert Persaud.
Two companies received the block with 50-50 stakes, Ratio Energy Limited (now Cataleya Energy Limited) and Ratio Guyana Limited. The latter is a subsidiary of the Israeli company, Ratio Petroleum. The parent company has been active in the oil industry for decades.
As for Ratio Energy, it was incorporated in Gibraltar, a tax haven, on April 15, 2013, and registered in Guyana on October 23 later that year.
Independent watchdog, Global Witness, said in its damning report ‘Signed Away’, that at the time of receipt of the block, the company was owned by an Israeli-based lawyer named Richard Roberts.
Ratio Energy’s name was changed on August 3, 2017 after it received the Kaieteur Block. Its two directors are the Canadian, Michael Cawood and Guyanese, Ryan Perreira, who have experience in mining.
Cawood’s LinkedIn page lists him as Cataleya’s Director and Chief Executive Officer. Pereira’s LinkedIn page lists him as Cataleya’s Director and Co-founder.
Pereira’s Pereira Group has a history of collaboration with Cawood’s Riva Gold Corporation. Neither of these men had any experience in oil exploration to talk about, prior to Cataleya’s receipt of the Kaieteur block.
Just like the Canje owners, both had no other oil assets or wherewithal to execute exploration programmes. They are also registered in tax havens and both did not receive the oil blocks via a public tender.
In line with the behaviour of the Canje owners, the players of the Kaieteur Block flipped interests in the concession. In fact, the owners of the Kaieteur Block sold a large stake to ExxonMobil without doing what they committed to doing under the contract.
It was only months after Exxon bought into the block that the oil major started a seismic survey. Exxon’s work revealed that the Kaieteur Block has an estimated 2.1 billion oil-equivalent barrels.
Considering how obvious the foregoing red flags are, local industry analysts have said it is safe for the ordinary man to conclude that ExxonMobil and Hess were clearly aware of the risks but moved ahead with the acquisition of interests so that they could reap the benefits of the murky deals which range from billions of dollars in tax concessions along with provisions that protect it from any law that may hinder its financial take.
It is important to note as well that Exxon Mobil is the operator for both Kaieteur and Canje while Hess holds a 15 percent interest in Kaieteur. Also, both offshore concessions are contiguous to the Stabroek Block which now holds approximately nine billion oil equivalent resources.
Where is the BETTER MANAGEMENT/RENEGOTIATION OF THE OIL CONTRACTS you promised Jagdeo?
Apr 19, 2024
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