Dear Editor,
I read Stabroek News’ coverage in yesterday’s edition of Mr. Jan Mangal’s comments regarding Frontera’s US$33M signing bonus with great interest. Being a close follower of news in the oil and gas industry, I was not aware that a signing bonus of this magnitude had been paid to government for this ‘farm in’, as the article implied. So, I decided to google and discovered that Guyana did not receive a single cent from this deal since it was a transaction between the companies. (Editor’s note: There was no implication in the news item that this money was paid to the government.)
I now ask Mr. Mangal to clarify a few of his statements for the public.
1) Mr. Mangal claims that “there was already 1.4 billion barrels of oil confirmed” at the time of the 2016 PSA and signing bonus. A quick check online shows that estimates were actually 800 million barrels confirmed, with the possibility of up to 1.4 billion. Is this what Mr. Mangal meant?
2) Can Mr. Mangal explain for those of us who know little about the industry what the impact of oil prices may have been on the agreement? Recall that global oil prices had plummeted in February of 2016 and caused concerns about the future of oil. Is it possible that this could have factored in to the government’s decisions at the time?
3) Mr. Mangal explains that we have forfeited “billions” in taxes. Can he explain where that figure comes from and perhaps provide a number that is a bit less vague?
4) Mr. Mangal points to a $1 billion signing bonus that ExxonMobil paid to Brazil. I must assume he is referring to the Campos block auction in late 2017. If that is the case, can Mr. Mangal confirm that Brazil actually received $1 billion from ExxonMobil alone? I can find no evidence that this figure is accurate or that ExxonMobil was the only company involved.
5) Finally, Mr. Mangal says that the Campos block was basically unproven with no confirmed oil. Yet it is my understanding that the Campos was an established basin with confirmed and potentially prolific potential. To compare Stabroek to this mature basin is misleading. Can Mr. Mangal clarify this?
I expect Mr. Mangal will accuse me of proposing these questions because I have some hidden agenda. Let me address this eventuality now – I ask these questions because if Guyana is to go to the bargaining table, we must have accurate information. We must understand our resource potential in context, and we must use that knowledge as the foundation for honest debate and discussions.
Yours faithfully,
Clement Smith
