Govt. now siding with ExxonMobil to avoid renegotiating oil deal

Mar 26, 2023 News

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…VP Jagdeo shirking responsibility in oil sector – Chis Ram

Kaieteur News – Though Guyana’s blossoming petroleum sector is in desperate need of pruning to ensure the fruits satisfy the needs of the local populace, the country’s leaders have not been hearkening to their respective roles.

This much can be said, particularly about Vice President (VP) Bharrat Jagdeo, who is tasked with management of the local petroleum, according to Attorney-at-Law and Chartered Accountant, Christopher Ram.

Ram in an invited comment on Sunday said he believes the Vice President has been shirking his responsibilities in numerous instances.

He pointed out that only recently the VP told the media that the Environmental Protection Agency (EPA) has been charged with ensuring ExxonMobil supplies a parent company guarantee.

According to Ram, “That is bulls**t. The EPA has nothing to do with insurance. He is refusing to exercise the significant rights and powers that Guyana does still enjoy.”

The Attorney argued, “I think the entire team of people responsible for the oil and gas sector is doing a very poor job. They are not paying enough attention to what the law and what the agreement requires; even the inadequate provisions of the 2016 agreement are not being sufficiently enforced.”

He explained that the 2016 Production Sharing Agreement (PSA) allows for a renegotiation of the oil contract, yet the government seems more inclined to serve the oil companies, rather than the people of Guyana.

“I know the contract and that is why I am so peeved that our representatives are betraying our trust. They prefer to covert with the Americans now than serve the interest of the people of Guyana,” Ram argued.

The Lawyer also dismissed the Vice President’s claim that the People’s Progressive Party (PPP) said it promised to review the oil contracts rather than engage in renegotiating the Stabroek Block deal.

“That is absolute nonsense. Guyanese are not stupid; we know what Jagdeo said and know what he meant. I also know what he told me in private conversation,” Ram challenged.

When it comes to the government using its discretion where permitted in the oil contract, Ram said the judgment of the leaders is completely off. He said the leaders could have inserted a ring-fencing provision; even without bringing Exxon to the table by simply adding a clause to the production licenses granted to the company.

VP Jagdeo is on record saying that this was a sore issue that the PPP would address. His position has however now changed, as the VP argues the need for ‘sanctity of contracts’.

The Attorney said, “I have made this point Ad nauseam that we did not necessarily need a ring-fencing provision [in the contract]. All they [government] have to do is to say that the revenue under any production license cannot be used to exploration purposes. It’s as simple as that. I really do believe that they are not applying themselves.”

Meanwhile, as it regards conducting audits of ExxonMobil, it was recently reported that Jagdeo directed this publication to the Minister of Natural Resources, Vickram Bharrat.

The Minister has never held a press conference and is usually not the first to address such issues. In fact, when Kaieteur News reached out to the Minister, he explained that the VP had already addressed the audits. The Minister was told that Jagdeo directed the question of the audits to him, but he never responded.

On the other hand, Ram believes that the government is not ensuring the oil companies’ financial statements are being prepared to reflect the nature of the expenses to develop the resources.

He said, “I don’t think that the oil companies’ financial statements are provided in the manner in which they ought to be prepared and that’s a blatant and glaring weakness that is being exploited by the oil company. Annex C sets out the order, nature and presentation of expenses and what the government is doing is allowing Exxon and its two partners to get away with all kinds of improper accounting.”

Ram added, “It all began with the pre-contract costs which were grossly inflated. I am really getting aggravated to see how they are screwing up this entire arrangement.”

The Chartered Accountant pointed out that Annex C identifies how expenses are organized and this is how the company should have been reporting their expenses. None of the reports meet the requirement of Annex C he said. Moreover the reports themselves are inconsistent with each other, according to Ram. Due to this, he said Exxon can bill Guyana for items that should not be recovered through Guyana’s oil.

The Attorney observed, “The manner of oversight is so weak that Exxon and the two other companies can probably prepare their accounts however they wish and organize the accounts in such a way that it becomes extremely difficult to carry out an objective and critical review even as the poor oversight allows claims for cost which are not justified in the agreement.”

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• audits, Insurance, renegotiating, ring-fencing, shirk

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