Introduction
The Public and Government Affairs Advisor of ExxonMobil Ms. Janelle Persaud has disclosed to the press that its subsidiary, Esso Exploration and Production Guyana Limited (EEPGL), has applied for its Petroleum Prospecting Licence for the Canje Block to be renewed. The Block was awarded to Mid-Atlantic Oil and Gas Inc. but it seems that not content with the 26,806 sq. km. awarded to it by Raphael Trotman, Exxon has decided to expand even further, showing it is, to use an old Guyanese word, “scraven”.
The PGA Advisor seems to lament that the Government has failed to act on the application four months after it was lodged on March 4, 2019. The Advisor must no doubt be aware that Ministerial responsibility for the petroleum now vests in the President in the absence of that portfolio being assigned to anyone else. If the law is being followed, Dr. Mark Bynoe has no statutory role or power in the extension of the Prospecting Licence and the relinquishment of blocks.
Mid-Atlantic is owned by a single shareholder Dr. Edris Dookie who holds 5,000 shares in the company with a value of $1,000 per share. The Agreement signed in March 2015 stated that the Company would have or would acquire the financial resources, technical and industrial competence and the experience to carry out Petroleum Operations and would provide an affiliate company guarantee satisfactory to the Minister for the performance and the observance by the company of the conditions of the licence. There is nothing in the public documents to suggest that this condition was met.
Taxes
Readers are aware by now that SARA, whose very legality has been the subject of a Court challenge, through the highly conflicted Eric Phillips, of the same SARA, has been conducting an adverse investigation into the origin and circumstances of the Mid-Atlantic Agreement for over a year now. Even if Phillips could find anything, he would have to encounter the complicit conduct of the APNU+AFC Administration and the Minister of Finance who less than one year ago passed an Order through the National Assembly ratifying substantial tax concessions to the Company. Taxes specifically referred to in the Order are the Income Tax Act, the Corporation Tax Act, the Income Tax (In Aid of Industry) Act and the Property Tax Act.
Notably, the Finance Minister has no power under the Petroleum Act to give special concessions on VAT or directly, the Capital Gains Tax Act. However, exemption from Capital Gains arising from an extension of the Property Tax Act applies in two cases – where a person is exempted from the Property Tax Act by resolution of the National Assembly, and second to companies granted exemption under the Income Tax (In Aid of Industry) Act for tax holidays.
Relinquishment
But let us get back to Ms. Persaud and her pronouncement about relinquishment. I fail to see how Exxon can apply for a renewal of a Prospecting Licence to which it is not a party, but more like a usurper. We have no idea how it came into the Agreement in the first place and whether it is the ubiquitous Raphael Trotman who would have approved any assignment of the Agreement. Trotman and Granger have certainly given a new meaning to Production Sharing Contracts! In fact, Mid-Atlantic is now reported to have a negligible 15% remaining in the Canje Block with the French oil company Total also sharing in the spoils.
Let us look at what the law states in relation to relinquishment under a Petroleum Prospecting Licence and first note that the term means the giving up of blocks by the Contractor under the Agreement. Section 24 of the Act dealing with the application for a renewal of a prospecting licence allows for such a licence to be renewed twice with the effect that such a licence may extend up to ten years plus a probationary period of six months. This ten year period is divided into four years in the first instance and two three-year extensions.
Section 24 provides that the number of blocks for which renewal is sought must not be more than half of the number of blocks for which the licence was granted in the first place. But there is a catch – this limitation is “subject to any Agreement”. So what does the Agreement state? It allows for a minimum relinquishment of 20% which is the percentage quoted by Ms. Persaud.
There is clearly conflict between the generosity of the Agreement and the logic of the Act with the Act seeking the front-end loading of relinquishment with 50% after four years. The Agreement on the other hand seeks to put the restrictions towards the backend. But why would the Government allow only a 20% relinquishment if there is little work and negligible expenditure during the initial period which appears to be the case here. That sound to me suspiciously like hoarding.
Next week: The Column will look at the financial statements of the company Mid-Atlantic for the year 2018 to see what expenditure, if any ExxonMobil or Mid-Atlantic has made under this Petroleum Agreement to justify such hoarding.
