August 9 ,2021
At his press conference last Monday, which one hopes will be convened at least monthly, President Ali contended that his government had not sequestered vital information on the oil and gas sector from the public.
He stated: “We are working now on a website that will have all the production details; that will have all the revenue details… that will have all the expenditure details. We are presently putting that system and institution in place”.
He added: “I do not believe that we have been hiding anything as it relates to the oil and gas sector,” as he claimed that “every piece of information that the government has, every discussions we have had… has been made public and shared with the public.”
The public evidence is quite different from what the President professes. There are two specific problems that have arisen with this one-year-old PPP/C government pertaining to the oil and gas sector which if not immediately cauterised could lead to costly missteps and opaque governance.
The first major problem is the lack of transparency and soundness in decision making and the second is the withholding of information and the inaccessibility of top decision-makers. It will be fair to say that when this government took office there was an expectation that there would be moves to renegotiate the oppressive 2016 Production Sharing Agreement (PSA) with ExxonMobil’s subsidiary, Esso Exploration and Production Guyana Limited (EEPGL). However, that door has since been slammed shut. However misplaced that perception of renegotiation might have been, the public expected at the bare minimum fully justified decisions and openness. This was completely absent in several areas.
The firing of Dr Vincent Adams as Director of the Environmental Protection Agency (EPA) was the first sign that the PPP/C government would apply its own doctrine of necessity to decision-making. Dr Adams was a consummate professional, fully qualified and had begun to hold the feet of ExxonMobil and non-oil and gas offenders to the fire. Aware of the firm line he had begun to take and recognising its palpable risk to the swift approval of the Payara oil platform, the Ali government, in a clear concession to ExxonMobil/EEPGL, sent Dr Adams on leave and then unceremoniously fired him. It then organised what can only be perceived as a feint in hiring a tainted former premier of the Canadian province of Alberta, Alison Redford to sanctify the Payara approvals with marginal improvements in the environmental permit. Approval for the Payara oil platform constituted leverage for the PPP/C government to rebalance the ExxonMobil PSA and it failed its obligation to the public.
The other unjustified decision is the one to proceed with the gas-to-shore-to-energy project. At a price tag of US$900m or more it must go down in the Guinness Book of World Records as the priciest project ever embarked upon by a government without a purpose-built feasibility study and reliant solely on assorted reports produced by its predecessor government whose current representative refuses to engage in his capacity as Leader of the Opposition. This project ties Guyana into long-term use of polluting natural gas as a transitional fuel. A haphazard decision when this country should be focusing completely on green energy and requiring EEPGL to re-inject the gas from its oil platform into its wells.
On the information side, Economist and Sunday Stabroek columnist Tarron Khemraj has voiced deep concern over the absence of data on oil production.
“… I believe the biggest hidden piece of information that shows no credible commitment is the lack of production data. I find this shocking given how much the supposed GDP growth rate is thrown around by the government, the IMF and IDB. Are they just making up the numbers? How do they know that GDP grew by 26% in 2020 if oil production data are not reported to the Bureau of Statistics?
“The law requires that the Bureau – not the IMF, IDB or BoG – calculate Guyana’s GDP. This means that ExxonMobil, by law, must report the production data to the Bureau of Statistics. Several observers have reported great frustration when trying to obtain the production numbers. Mr. Alfred Bhulai of the Transparency Institute Guyana Inc (TIGI) and the folks from the Oil and Gas Governance Network (OGGN) have been asking for said numbers for some time. They have been stonewalled by various government officials….”, Khemraj stated.
He added that surprisingly, the BoG reports – as useful as they currently are – are completely silent on oil production. The reports, he said, document, among other variables, the inflows and the closing balance of the account, which stood at US$344.16 million at the end of June 2021. He also noted that it presents a chart of the price of oil, but no production number, adding that it should not be difficult for the Bureau of Statistics and the BoG to upload monthly production data on their websites.
“When the NRF is up and running, the economist will obviously have to figure out whether the right amount of money is getting to the government. There is no way of accurately knowing the right amount without the production quantity and the prevailing market price. Another factor is the price at which (Guyana’s oil) is sold…Is it at the spot market price or at a premium over market price? Secrecy on these key variables means there is much room for mischief”, Mr Khemraj asserted.
Since the appearance of his column some data has been uploaded on the website of the Ministry of Natural Resources.
Stabroek News has also made numerous efforts to no avail to get an official answer on oil sales and the arrangement for this country’s profit share, as per the agreement it has with ExxonMobil and partners for the Liza-1 development in the Stabroek Block.
This newspaper has for weeks also reached out to government to access information on how many lifts of one million barrels each Guyana has received, how many more are scheduled for 2021, the current marketer and the terms for marketing the oil, and other general information on the oil and gas sector.
This country had to learn through a Twitter statement that the last 1 million barrels of oil was lifted by the Indian Oil Corporation last month. Before that, the last reported lift was on April 13, 2021, of 998,645 barrels of oil from the Liza Destiny.
Furthermore, no explanation was given as to why the new tender criteria for an oil marketer was not made public and why interested companies had to first write the Ministry of Natural Resources for this information.
There has also been no word on the IHS Markit audit of Exxonmobil’s US$460 million pre-contract costs. This audit is a crucial test of whether ExxonMobil and its partners are observing the highest prudential standards in recovering costs and whether auditors on behalf of Guyana will firmly reject any spurious claims. Why is this information being withheld from the public? President Ali can immediately rectify this deficiency.
The Alison Redford Report and terms of reference of her contract are still outstanding despite promises since last year that it would be made public.
In addition, government is still to say how it would address the contract with ExxonMobil and partners that says that the Minister responsible for the sector has to pay GRA the sums owed in taxes. This again underlines the abominable provisions of the PSA which relieve ExxonMobil of its obligation to pay taxes but even in its execution the government and the Guyana Revenue Authority appear at a complete loss as to what to do and whether it would be legal. President Ali can also swiftly address this conundrum.
There are other areas where the government has not presented information or upheld the rights of Guyanese. One more important example will suffice and requires unequivocal action by the government. A cleaner was forced to seek court action for compensation for injuries she allegedly sustained on an EEPGL oil rig in the Atlantic. The court ruled in her favour after the company, Centipede Offshore (Guyana) Inc did not present a defence. She said that when she approached the Ministry of Labour to assist her in gaining redress she was told that it would be too expensive to visit the rig. What an outrage and pusillanimity in an environment when local workers will be at risk of all sorts of injuries on EEPGL’s infrastructure and those of its many contractors. President Ali should order an immediate investigation of the circumstances of Tanesha Fredericks’ treatment by the ministry and ensure that her rights are fully conserved and that the company she was employed it recompenses her fully for any injuries suffered.