Oil sales agreement shrouded in secrecy

Dec 01, 2022 News

…as Govt. continues to violate EITI standards

Kaieteur News – The Government of Guyana is continuing to violate the Extractive Industries Transparency Initiative (EITI) standards that require full publication of oil sales agreement, as yet another deal remains in the dark.

Notably, Guyana just awarded BP International Limited, a subsidiary of British Petroleum a contract to market Guyana’s share of profit oil from the Liza Destiny and Liza Unity Floating, Production, Storage and Offloading (FPSO) vessels- currently producing about 360,000 barrels of oil per day.

Minister of Natural Resources, Vickram Bharrat

In making the announcement, the Ministry of Natural Resources did not say the costs that will be attached to these services, while the tender documents seen by this publication said the company bid US$000.000 per barrel of oil. One other firm had submitted a similar bid while the other international firms that expressed interest submitted the specific compensation they were seeking.

In an invited comment on the issue, subject Minister Vickram Bharrat said Government will not be paying the company for its services. He explained that there are no marketing fees that are being charged by BP International. When he was asked to specifically say how the company would be benefitting from the arrangement with Guyana, he pointed out, “They will have to decide whether to take the crude to their refinery or they will hold and sell. There are many ways once we are not paying.”

In the meantime, the contract with the company remains secret, contrary to the guidelines of the EITI.

Kaieteur News previously reported that Aramco Trading Limited (ATL), the London-based trading subsidiary for the State controlled Saudi Aramco, had inked a one year contract with the Ministry to market Guyana’s crude entitlement from the Liza Phase One Project. That contract came to an end last month. This deal too was never released for public scrutiny.

Despite calls from various sections of society for the release of large-scale mining contracts, the People’s Progressive Party (PPP) Government continues to conceal the US-multimillion, and more recently US-multibillion, contracts.

According to the EITI Standards of 2019, as it regards contracts “Implementing countries are required to disclose any contracts and licenses that are granted, entered into or amended from 1 January 2021. Implementing countries are encouraged to publicly disclose any contracts and licenses that provide the terms attached to the exploitation of oil, gas and minerals.”

It goes on to point out that countries must also provide: “An overview of which contracts and licenses are publicly available. Implementing countries should provide a list of all active contracts and licenses, indicating which are publicly available and which are not. For all published contracts and licenses, it should include a reference or link to the location where the contract or license is published. If a contract or license is not published, the legal or practical barriers should be documented and explained.”

Guyana is among more than 50 countries that have committed to strengthening transparency and accountability of their extractive sector management by implementing the EITI Standard. The country signed on to this pact on October 25, 2017.

In June of this year, Kaieteur News reported that Guyana’s third Extractive Industries Transparency Initiative Report made yet another call for the Government to release all mining contracts, especially those dealing with large-scale operations.

Since becoming a member of the global body, the report notes that the Government agreed to adhere to several requirements. In this case, EITI requirement 2.4 (a) of the 2019 Standard states that Guyana should publicly disclose all mineral agreements entered into force prior to the reporting period, in this case, 2019.

Importantly, the report highlights that the country’s Mining Act (1989) does not include any expressed restrictions on the public disclosure of mineral agreements and licenses by the Government.

It goes further to state that even the mineral agreement signed on November 18, 2011 for Aurora Gold Mine developed by Guyana Goldfields is silent about restrictions on the public disclosure of the mineral agreement. Be that as it may, that very agreement, along with many others, is not available online for citizens to understand what concessions were granted to these firms versus what the country would get in return.

In light of this, Guyana’s third EITI report recommended that a work plan be drafted for the electronic publication of all mineral agreements in the mining sector.

Last Friday, the Alliance For Change (AFC) told Reporters that Guyana could face expulsion from the international watchdog body as it has several violations. As such, former Minister of Public Security and Leader of the AFC, Khemraj Ramjattan said this can mean that foreign direct investment would be affected.

“When they look at the scoreboard as to which countries to come in, which countries are very transparent with their institutions of governance and transparency in their record keeping in the various sectors (they) would find that Guyana is so opaque that they are not gonna want to come and what will come to Guyana will be corrupt kinds of Investors – not that which we would want to come to Guyana,” he explained.

In August of this year, Vice President Bharrat Jagdeo was asked for an update on the release of the mining contracts by Kaieteur News Publisher, Mr. Glenn Lall when the VP again promised to make the contracts public.

Jagdeo said, “I don’t think these agreements should be secret. Right, because the concessions are standard… Many people don’t remember this but the Minister of Finance used to sign every duty-free letter that was when I was there and we changed it. When I became President and even before that, we started moving to change it where all of that, the administering of duty-free concessions would be done by the GRA and not by a political individual and secondly, they would be based on legislation.”

He therefore indicated, “I don’t see the reason why many of these are not in the public domain already. I’ll find out about it.”

Despite giving this assurance, there has been no word on the mining agreements to date.