Latest update February 16th, 2025 7:49 PM
Aug 08, 2021 News
…Fifteen companies submit bids to market Guyana’s oil
Kaieteur News – Since issuing its Invitation For Bids (IFBs) in July for companies to submit bids to sell Guyana’s oil entitlement from the Liza Destiny vessel, a total of 15 regional and international companies submitted tenders.
Upon a preliminary review of the companies vying to sell Guyana’s crude, Kaieteur News discovered that eight of the bidders and/or their primaries are linked to scandals, foreign bribery and widespread corruption.
These companies include China Offshore Oil Singapore; Sinochem International London; Liatso SA Switzerland & Lukoil Pan America; Equinor ESA; Totsa Total Oil Trading SA; Shell Western Supply & Trading Limited; Vitol SA; and Mercuria Energy Trading SA.
These well-documented malpractices, which have resulted in convictions and fines, have also ensnared senior executives of these oil companies and traders while others are still under investigation.
The tainted companies
One of the tainted companies is China Offshore Oil International Pte Limited. In 2015, this state-owned Chinese company had their former Deputy General Manager, Wu Zhenfang, under criminal investigation for accepting an undisclosed amount in bribes.
Sinochem, another interested Chinese company, saw one of its former Vice Presidents, Du Keping, sentenced last December to 11 ½ years in prison for accepting US$1.8M in bribes. Executives of the Russian energy company, Lukoil Oil Company & Litasco, were in 2018 criminally investigated by Geneva’s Attorney General on suspicion of corruption of foreign officials and money laundering.
Equinor formerly known as Statoil is a Norwegian company that was fined $20 million Norwegian krone (NOK) in 2018 for misconduct and extensive corruption in Iran in 2002/2003. Reports state that Equinor had attempted to secure lucrative oil contracts for the company in Iran.
The company’s Director for International Operations, Richard John Hubbard, was also ordered to pay NOK$200,000 in fines for his involvement in the case. This was mainly achieved by hiring the services of Horton Investments, an Iranian consultancy firm owned by Mehdi Hashemi Rafsanjani, the son of the former Iranian president.
Notably, reports indicate that Horton Investments was paid US$15.2 million by Equinor to influence important political figures in Iran to grant oil contracts to Statoil. Another bidder, Totsa Total Oil Trading SA, was found guilty in 2016 of corruption in the United Nations’ oil-for-food programme for Iraq during Saddam Hussein’s rule. In the same year, the Parisian Court of Appeal found the company guilty of corrupting foreign officials and was fined over US$800,000.
Prior to this conviction, Total in 2013 had agreed to pay $398.2 million to settle US criminal and civil allegations that it paid bribes to win oil and gas. United States authorities had alleged that between 1995 and 2004, Total paid about $60 million in bribes to induce an Iranian government official to help the company obtain lucrative development rights in three oil and gas fields.
In 2019, Shell was prosecuted for criminal charges relating to a $1.3 billion settlement for an oil exploration licence in Nigeria. According to an article by CNBC, it was alleged that although the funds were paid to the Nigerian government, the money actually went to Malabu Oil and Gas — a company linked to the former oil minister, Dan Etete.
Eni’s CEO, Claudio Descalzi, and four ex-Shell managers also faced charges of international corruption in Italy, where prosecutors allege that they were aware that payments would be pocketed by individuals rather than the Nigerian government.
Stabroek Block partner, Hess Corporation, is also caught in the limelight with these tainted bidders. Reports show that the Government of the U.S Virgin Islands had in 2015 sued Hess Corp. for more than $1 billion, alleging that the US company abandoned a massive oil refinery it had pledged to operate through the year 2022.
According to details from an article by Canadian Business, “the complaint alleged a pattern of misconduct by executives at Hess, which operated with Venezuela’s state-owned oil company what was once the world’s largest refinery before closing it in 2012. It said Hess conspired to strip the facility’s assets in order to leave the government with claims against a broke, polluted and inoperable refinery.”
One other oil trader vying to sell Guyana’s crude is Vitol SA. This global top oil trader, which is based in Switzerland, was implicated in the biggest corruption scandal in Latin America. It is known as Operation Car Wash, the bribery scam that ultimately resulted in hundreds of criminal indictments and over 150 criminal convictions including a popular South American head of state.
Federal prosecutors had alleged that Vitol along with Glencore PLC; Petrobras SA; and Mercuria Energy Trading had funnelled over US$31 million in bribes to corrupt Petrobras employees so that they may win big contracts, along with acquiring other benefits. The bribes took place between 2011 and 2014. Further compounding the issue is the fact that top executives of Petrobras had “total and unequivocal” knowledge six years before the bribery scandal erupted, yet had refused to put a stop to it.
Petrobras had delayed reporting its annual financial results for 2014, but in April 2015 it released “audited financial statements” showing US$2.1 billion in bribes and a total of almost US$17 billion in write-downs due to overvalued assets. At least eleven other countries, mostly in Latin America, were involved.
The corruption scandal grew in part because it challenged the impunity of politicians and business leaders that had prevailed until then. Structural corruption in the political and economic system, no longer tolerated or accepted, was being investigated and resulted in some criminal charges. In fact, 429 individuals were indicted and another 159 officials were convicted including seemingly untouchable politicians like former presidents Luiz Inácio da Silva and Dilma Rousseff, his successor.
Kaieteur News is unaware whether the stained pasts of these traders disqualifies them from securing the position of Guyana’s oil trader. This publication understands, however, that bids are valid for the next 116 days.
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