Every Man, Woman and Child in Guyana Must Become Oil-Minded

Part 18

Source: Petroleum (Exploration & Production) Act Cap. 65:04, ss. 30-32

Trotman and Turbot

The good news

This column keeps meeting distractions from week to week. Column 17 last week indicated that Articles 12 Natural Gas and 13 Valuation of Crude Oil would be addressed later in this series. They will have to wait as we turn to two issues taking place this week, one the good news and the other the bad stuff. Let us start with the good news first. Yesterday October 5, ExxonMobil Corporation announced yet another oil discovery offshore Guyana. This means that since the May 2015 announcement of a huge find we have had four other finds. Liza, Payara, Snoek and Liza Deep, and now Turbot. The well was drilled to 18,445 feet (5,622 meters) in 5,912 feet (1,802 meters) of water on Sept. 29, 2017. The Turbot-1 well is located in the southeastern portion of the Stabroek Block, approximately 30 miles (50 kilometers) to the southeast of the major Liza phase one project.

Guyana is blessed. All we can hope is that good and intelligent leadership and competent and careful management will ensure that we do not transform this blessing into a curse. Experience shows that nothing can be taken for granted, internationally or in Guyana.

Of course, ExxonMobil – which is not the entity operating in Guyana – seems extremely laconic with its announcement so the message to all Guyanese is: let us be cautious. There is no suggestion that this is a major find – it simply suggests that the Turbot 1 did not come up dry.  The announcement is the first stage of a process which may lead to a significant find but until then we wait expectantly. Because the announcement was so terse, we go back to the Petroleum Exploration and Production Act for some meaning.

When a discovery of petroleum is made, the licensee is required to carry out the following steps:

Observations

There are some interesting observations. The Trotman Agreement of June 27, 2016 was made not with one but with three companies referred to: Esso Exploration and Production Limited, Hess Guyana Exploration Limited and CNOOCNexen Petroleum Guyana Limited.

All three companies are incorporated outside of Guyana and operate here as branches. The statement by ExxonMobil came out of Texas, USA and was clearly made pursuant to the American company’s obligations to its shareholders and regulators, not on behalf of the trio, or indeed on behalf of its local branch.

Why in the name of reason, must Guyanese have to rely on ExxonMobil rather than be informed directly by the local licensees? While Minister Trotman is busy ducking the 2016 Agreement from Guyanese and justifying this by reference to some world class, anonymous advisors, Guyanese receive second hand, critical information from a company which is not even one of the licensees.

It is interesting too that none of the trio has publicised any information on the quality of the petroleum discovered, a matter that determines price on the world market. Surely that is not acceptable. Nor is it helpful in terms of projections if the trio do not disclose for us the estimated cost of production which will help in forecasting revenues. Are Guyanese to believe that these companies do not at this stage know the answers to both questions, and can Trotman tell the nation something?

The bad stuff

Source: Petroleum (Exploration & Production) Act Cap. 65:04, ss. 30-32

Now for the bad stuff. Some time ago, Stabroek News reported that an employee/officer of the Ministry of Natural Resources, was taken by Minister Raphael Trotman on an ExxonMobil all-expenses paid trip to Texas, a full month after she had tendered her resignation and therefore had no future role in the Ministry or Government. It has now been announced that Minister Trotman and the young lady were married in the Spice Island last weekend.

Now let us put this into context. On the delegation was Minister Dominic Gaskin of the AFC who described the AFC ministers of the APNU+AFC Government as “unbribable”.

Under any reasonable test, this act by Trotman would be considered as corrupt (public office for private gain). Did Mr. Trotman tell his colleagues that he and the young lady were engaged/about to be married? If he did not, was that not a material non-disclosure? And if he did, did they object, and if not, why not?

It would be interesting also to know whether Mr. Trotman informed ExxonMobil of his relationship with the young woman, and whether he and the other four Ministers who went on the visit did not consider his action at the very least, inappropriate and personally uncomfortable.

This act for which the Administration must collectively be held responsible has certainly diminished us in the eyes of ExxonMobil.

Despite what Minister Gaskin said, the cost of the visit does not qualify as an expenditure under the petroleum regime, and must therefore be borne by the shareholders of that company. We need to act responsibly and properly with all the oil companies, not compromise our country and our standards.

Conclusion

Over a rather short period, Minister Trotman has displayed a lack understanding of the petroleum laws, incompetence in engaging with the oil companies, poor judgement and ethical standards. He seems unsafely vulnerable and poses a real threat to the interests of this country but given that the standard for ministerial conduct in this Administration has been set so low, it would be naïve to expect any action by President Granger.

Comments  

Every Man, Woman and Child in Guyana Must Become Oil-Minded Part 36

Introduction Readers will recall that Article 27 – Applicable Law, was addressed in Column 29 which is available on the website of the Stabroek News as well as on chrisram.net.

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Every Man, Woman and Child in Guyana Must Become Oil-Minded Part 35

Government inaction now constitutes force majeure! Today we take up from Article 24 which deals with force majeure, the definition of which is set out in paragraph 2.6.

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Every Man, Woman and Child in Guyana Must Become Oil-Minded Part 34

Just a reminder that this series within a series seeks to compare the Janet Jagan administration’s 1999 Agreement with the Trotman 2016 Agreement and as we closed last week’s column we were on Article 20.

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Every Man, Woman and Child in Guyana Must Become Oil-Minded

Part 33   Local Content Article 18 which deals with local content has been subject to a number of modifications, the first of which recognises that the activities will be carried out not by the Contractor but by an Operator appointed by the three companies making up the Contractor.

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Every Man, Woman and Child in Guyana Must Become Oil-Minded Part 32

The March of Folly   The 2016 Agreement places greater emphasis on “gas”, or more correctly, “associated gas”, compared with the 1999 Agreement, including superficially minor, but no less significant, changes to Article 11 – Cost Recovery and Production Sharing and Article 12 – Associated and Non – Associated Gas.

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