Nov 30, 2020 News
Kaieteur News – Given its handling of critical matters pertaining to the oil industry, former Presidential Advisor on Petroleum, Dr. Jan Mangal, is not convinced that the People’s Progressive Party/Civic (PPP/C) will move away from its record of “zero transparency and white elephant projects.” The consultant made this criticism as part of a written commentary to the Inter-American Dialogue (https://www.thedialogue.org/energy-advisor/) published on 27-Nov-2020.
In response to questions on how the PPP/C is managing the petroleum industry, the international consultant criticized the ruling party for failing to maximize the country’s share of revenue from the infamous Stabroek Block deal. He noted that the administration could have increased the nation’s share, which is currently a 50 percent split of profit oil and a two percent royalty by using the approval of the Field Development Plan for the Payara project as its bargaining chip. Instead, Dr. Mangal said that the Payara project approval was rushed.
Even as he was critical of the government’s current handling of the sector, Dr. Mangal said one still has to remember that before it lost the 2015 elections to the APNU+AFC, the PPP/C made two controversial oil block awards to unqualified contractors. He said that this was done only days before ExxonMobil publicly announced that there was oil in the adjacent Stabroek Block. “This bizarre decision forfeited millions or even billions of U.S. dollars for the country. And one should ask why the PPP did not wait a couple days instead,” Dr. Mangal stated.
Kaieteur News would have been at the forefront of exposing the red flags in the award of the Kaieteur and Canje Blocks by former President, Donald Ramotar, in a series titled ‘The Fleecing of Guyana.’ The Canje Block was awarded to local company, Mid-Atlantic Oil & Gas, by the Donald Ramotar administration on March 4, 2015, days before the elections. The Kaieteur Block was awarded April 28, 2015 – just two weeks before the elections – and like Canje – 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 red flags which have manifested in both situations include that the awards were given to unqualified companies, that the initial owners quickly flipped the blocks without doing any work, that they are incorporated in secrecy jurisdictions, and that Guyana likely lost revenue due to the avoidance of an open, competitive bidding process.
In spite of the red flags that were exposed, Vice President, Dr. Bharrat Jagdeo, has said that based on what he knows about Ramotar, he does not believe that any corruption took place. In fact, the official said that the issues raised by Kaieteur News can be explained away since in that time, before the discovery of oil, Guyana was liberal with the way it went about issuing licences.
He responded to the assertion that the blocks were given to companies, which are not capable of developing them as he noted that even oil majors like ExxonMobil and Total SA would take licences and flip them. This is what the initial owners of the Kaieteur and Canje Blocks did, without doing any work.
“So whether you have capability or not,” Jagdeo said, “that was never a requirement of the [Petroleum] Act, particularly in that period when you did not find oil… People would have to face a whole range of questioning, even with the transferral [of stakes].”
In today’s times, he said, there would be much more stringent measures to determine the capability of applicants before awarding licences.
With regard to calls for an investigation by an international team, Jagdeo had said that he has to follow a sequence of actions, starting first with information gathering. He said that this involves getting certain documents from the Guyana Geology and Mines Commission (GGMC) on the award process during that time by Ramotar. He said that these documents have to be examined along with others to assess if there was any skullduggery, following which, a determination would be made on whether an investigation is necessary.
Since committing to doing this earlier this month, the Vice President has not disclosed how much progress he has made on this critical matter.
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