November 24 2019
Dear Editor,
At the 2019 Guyana International Petroleum Business Summit & Exhibition (GIPEX 2019) which concluded late last week, Minister of Finance Winston Jordan told the hundreds of mostly overseas delegates that profit share monies from the Esso/Hess/CNOOC Petroleum Agreement would not be had until after the first year. The press quoted him as stating, “As I imagine, we will get that at the end of a first year. Remember, it is a profit share, so after the accounts are audited and so on.”
That statement by Mr Jordan, a key member of the Quintet Plus One appointed by President Granger several years ago, causes me great concern in a matter of the greatest possible importance to the future of the country, i.e. our capacity and competence to manage the petroleum industry. Contrary to Mr Jordan’s understanding or imagination, profit share, in fact, is done on a monthly basis in accordance with Article 11.6 of the Agreement. This is what the Agreement states:
“Subject to the provision of Article 14 (which allows the Government to take its share in kind at the Delivery Point and to separately dispose of it), the Profit Oil and/or Profit Gas shall be shared between the Government and Contractor on a Monthly basis according to their respective entitlements as set out in Article 11.4.”
What Article 11.4 does is provide for a 50/50 split of the balance of crude oil after deducting Contract Costs, subject to the 75% limitation on deductible expenditure in any month. That limitation guarantees a return to Guyana of at least 14.25% of production less any quantities used by the oil companies for fuel or transportation in petroleum operations.
A few months ago, Dr Mark Bynoe told the media that he had not read the Petroleum Agreement which Mr Granger had appointed him to oversee as his first order of business. He further showed how little he grasped the petroleum operations when he spoke of Guyana lifting “crude cargo of one million barrels every eight to 10 days.” In fact, Guyana’s entitlement would, in the first two years, be less than 175,000 barrels every ten days!
As Minister of Finance, Mr Jordan’s responsibility for the preparation of the National Budget would include the calculation of the amount of oil receipts to be allocated from the Natural Resources Fund to the Consolidated Fund. Any indication, such as Mr Jordan’s statement at GIPEX made to the petroleum world, including the oil companies, that he has not read or does not understand the financial provisions of the petroleum contract should cause compounded concern as we rush headlong into first oil.
Yours faithfully,
Christopher Ram