Gov’t/Ratio oil contract released

Government on Wednesday released a petroleum agreement that was signed between the then president Donald Ramotar and Israeli company Ratio Energy Limited just two weeks prior to the May 11th, 2015 general elections, and it also includes terms that mirror those in the controversial 2016 deal between the current administration and the local ExxonMobil affiliate and partners.

The release of the agreement by the Natural Resources Ministry follows the release of both the 2016 agreement and one other between the former administration and CGX in 2013.

Ramotar has said that a decades-old template had been used for agreements signed between the former administration and oil exploration companies. The current administration has faced continued criticism over the terms of the renegotiated agreement with Exxon, with critics saying that the company’s oil find here in 2015 provided the basis for a better agreement to be negotiated.

While the Exxon contract included a US$18 million signature bonus, the Ratio contract does not include one.

While ExxonMobil paid a signature bonus, both the past and present governments have said that signature bonuses do not form part of the Guyana’s contract regime. The GGX contract also did not have a signature bonus.

The 121-page Ratio agreement, comprising 33 articles, states that Ratio will pay a royalty of 1% and, like the Exxon agreement, profits will be split 50/50 between the contractor and government.

Where Exxon and its partners will pay US$1 million annually as licence rental charges and CGX US$100,000, Ratio agreed to pay US $200,000.

The Exxon agreement covers 26,806 sq. kilometers, the CGX agreement 4, 000 sq. kilometers and the Ratio agreement 13,535 sq. kilometers.

Although Ratio has a bigger concession, it was asked to pay less than CGX for the training of locals. The contract states that Ratio will pay US$60,000 for each of its three renewals and that money will be used for the training of locals. Exxon has to pay a sum of US$300,000 annually to government compared to CGX’s $100,000, which will provide Guyanese personnel nominated by the Guyana Geology and Mines Commission (GGMC) with on-the-job training in the contractor’s operations in Guyana and overseas.

According to a Ministry of Natural Resources statement accompanying the release of the agreement, Ratio Energy Limited., now Cataleya Energy Limited and Ratio Guyana Limited, commenced negotiations with the previous administration for a Petroleum Licence within the ultra-deep water Guyana Basin area in mid-2012.

At the time, it noted, the area was known as Annex B but it has since been renamed the ‘Kaieteur Block.’ Ratio’s concession totals approximately 13,535 sq. kilometers.

It explained that the former government had nearly completed the negotiations in 2013, when a vessel for United States company Anadarko, which was working here, was seized by the Venezuelan army. The negotiations were subsequently stalled and did not resume until the first quarter of 2015.

On April 28th, 2015, two weeks before General and Regional Elections here, the production sharing agreement was signed by both the then Government of Guyana and Ratio’s principals.

Ramotar has said that the contract he signed with CGX followed a template for all agreements clinched before petroleum was discovered in 2015. He said on Wednesday that the Ratio contract was the last of two he signed during his tenure as president.

He once again emphasised that it followed a template and it should in no way distract from the fact that that the contract signed with Exxon in 2016 was flawed since it came after a major hydrocarbon discovery in 2015.

The former president said that the GGMC has a template which it worked from since the “mid 1980s” but it was tweaked in the 1990s and then in 2012. The changes made, he said, were to cater mostly for the addition of gas discovery since the exploration moved from the continental shelf to deep and ultra-deep waters. Prior to 1999, all contracts pertained to exploration on Guyana’s shelf.

The full contract is available at https://www. nre.gov.gy/wp-content/uploads/2018/02/Ratio-Agreement.pdf

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