December 7 ,2020
By Kiana Wilburg
Kaieteur News – When Kaieteur News had exposed in March 2018 that the agreement for the Orinduik Block allows UK exploration conglomerate, Tullow Oil and its partners to essentially pay no royalty for oil discovered, citizens immediately questioned who advised the former Natural Resources Minister, Raphael Trotman, to go ahead with such a cheap sellout of the nation’s resources.
Former Natural Resources Minister, Raphael Trotman
Despite numerous challenges, no attempt at a proper explanation was ever offered publicly by Trotman. However, parliamentary documents obtained by Kaieteur News note comments by Trotman to the effect that the agreement, with its lopsided terms, was actually negotiated between the People’s Progressive Party (PPP) and the oil company. Trotman had made this revelation during a May 8, 2018 meeting of the Parliamentary Sectoral Committee on Natural Resources, a committee chaired at the time by the PPP’s Odinga Lumumba.
In response to questions in committee on how applicants for oil blocks would be chosen, Trotman had noted that since the discovery of oil in 2015 in the ExxonMobil operated Stabroek Block, the APNU+AFC regime did not issue any new blocks, save and except in one instance, which was to Tullow Oil.
The former Minister continued, “That company had submitted its application before the elections and Government considered that it should honour that because the agreement, all intents and purposes had been negotiated prior to the change of Government. So, in January, 2016, we give the right to Tullow Oil Company to proceed, as they had agreed with the previous Government.”
He added, “Outside of that, we have, in a sense, enforced the solid moratorium. We have not issued any new blocks because we want to ensure that we have a control and a sense and definition of what is it that we are dealing with…”
Even though the former Minister would have disclosed this information to the parliamentary committee, he did not during interviews with the media to counter harsh criticisms that followed from the PPP on the one-sided nature of the contract. In fact, Vice President, Dr. Bharrat Jagdeo had asked during his time as Opposition Leader, for Trotman to inform the nation of who advised him on signing away a prime offshore concession in exchange for nothing. Jagdeo had said that the one percent royalty detailed in the Orinduik Production Sharing Agreement (PSA) is an industry low, even lower than the two percent royalty in the Stabroek PSA that has fielded sustained criticism. He was also highly critical of the fact that the one percent royalty is recoverable.
During one of his press conferences held in July 2019, Dr. Jagdeo had said, “It’s not one percent because it’s recoverable. Recoverable means it’s zero. We have to pay their one percent royalty for them. That is the problem.”
When Kaieteur News had contacted Minister Trotman during the same timeframe to explain the reason behind allowing this provision to be included in the PSA, the former Minister said he was not in a position to speak in a detailed manner.
Trotman who signed the deal with Tullow Oil and Eco Atlantic would only say, “I’m unable to discuss beyond saying that, as with both contracts, I acted on directions, which I believe were in the best long-term strategic interest of the country.”
ORINDUIK PARTNERS
In January 2016, Tullow Oil and Eco Atlantic Oil and Gas Limited signed the Petroleum Agreement for the Orinduik Block offshore Guyana.
Tullow Oil as the operator of the block paid past costs and carried Eco for the first 1000km2 of the 2550km2 3D Survey. Further, Tullow contributed an extensive 2D seismic data set and interpretation.
The Company’s 2550 km2 3D seismic survey was completed in September 2017, well within the initial four-year work commitment the company made for the initial 1000km2. In September 2017, Eco announced that its subsidiary, Eco Atlantic (Guyana) Inc. entered into an option agreement on its Orinduik Block with Total, a wholly-owned subsidiary of French Company, Total S.A. pursuant to the option.
Total paid an option fee of US$1 million to farm in to the Orinduik Block; an additional payment of US$12,500,000 was made when Total exercised its option to earn 25 percent of Eco’s working interest in September 2018.
Following the exercise of the option by Total, the Block’s working interests became: Tullow – 60% (Operator), Total – 25% and Eco – 15%. In October, 2018, the then Granger government approved the Total farm-in on the Orinduik Block, which has the potential for almost three billion barrels of oil equivalent. Total subsequently sold 10 percent of its interest in the Orinduik Block to Qatar Petroleum. The approval for this farm-in is now under consideration by the PPP administration.
