We’re not saying cancel deal with ExxonMobil; just give Guyana what it deserves – Global Witness

— says Global Witness Senior Campaigner – Jonathan Gant

Global Witness, an international organization that has fought against natural resource exploitation, poverty, and corruption since 1993, recently published a report called “Signed Away” which has added more firewood to the heated debate on whether Guyana got a good deal with ExxonMobil for the oil-rich Stabroek Block.

 Jonathan Gant

In summary, Global Witness says its fiscal analysis shows that Guyana left US$55B on the table due to poor negotiations on the part of Minister of Natural Resources, Raphael Trotman. The non-governmental organization also believes that ExxonMobil had a role to play as it employed some strong-arm tactics.

Since being released for public consumption, the report has attracted concerns from many about the veracity of the inherent accusations and their real intentions, as well as scathing criticisms from the government.   

To set the record straight, Jonathan Gant, Senior Campaigner for Oil, Gas and Mining at Global Witness took part in an interview on Kaieteur Radio’s programme, Guyana’s Oil and You yesterday afternoon. (February 06, 2020)

There, Gant explained that the main intention of the report was to determine whether the Guyana-ExxonMobil deal was any good, in Guyana’s best interest, and whether it was what the country deserved. Gant acknowledged that even before Global Witness started its investigation back in May 2019, there were already concerns about the deal in the local media.

In this regard, the Senior Campaigner recalled that the local media would have exposed the fact that the contract was hidden for more than a year, that the US$18M signing bonus was shrouded in secrecy, and that there were concerns about possible corruption.

Gant said that the team at Global Witness started collecting evidence and upon examination of same, found that Guyana got a deal that was simply exploitative; hence the recommendation for a renegotiation was made. Further to this, Gant noted that Open Oil was contracted to do a fiscal analysis, and the results showed that Guyana did leave US$55B on the table. Gant said that the model used to compute this is free for anyone “to play with” while noting that it is absolutely credible.

Based in Berlin, Open Oil is considered a leading provider of financial analysis and commercial advice to governments and other public entities around the world. It also has extensive experience in advising on asset valuation, negotiations, fiscal regimes, auditing revenues and more.

Gant told Kaieteur Radio that with its ‘Signed Away’ report, Global Witness is not saying Guyana should kill its oil deal based on its findings. “Guyana is not as developed as it wants to be. (And) we do not have the right, as much as we have talked to many individuals, (to say) don’t take this oil. We are not saying that you should cancel the deal,” Gant said. He stressed however that Global Witness is simply recommending that the people did not get what they deserve.

CORRUPTION

When asked to say if the investigations found any evidence of corruption where the deal is concerned, an emphatic “no” was Gant’s response. He is of the view, however, that this is what makes this the story of the Exxon-Guyana deal even more compelling and important.

Gant said that Global Witness does not necessarily believe this is a story of corrupt people, but rather, an aggressive company that rushed through a deal, meanwhile, officials who knew that they needed more information, acquired it, ignored it, and then rushed to close the deal just two days before the value of another oil discovery (Liza Two) was going to be made public.

“Why on earth would anybody sign away the country’s biggest asset before knowing the true value of it? That just strikes me as extraordinary,” the Senior Campaigner expressed.

With respect to criticisms that the report is baseless and full of sensationalism, Gant said, “I don’t believe the report is sensationalist. We found evidence and produced it! We made nothing up. We aren’t allowed to do so, both professionally and legally…I think our evidence shows they (ExxonMobil) were aggressive and the US as partner has an influence (to push for the deal to be renegotiated)…”
As far as the criticism of timing is concerned, Gant said he appreciates that it is election season for Guyana, but there was no sinister motive behind the release of the document at this time.

Gant said, “We wanted to publish as soon as we could, because every day Exxon produces is a day that is going to make it harder for renegotiation to happen, and the more and more they get entrenched, the lesser the interest will be from the government to change the terms, and the harder the fight from the companies against it will be.”

The Senior Campaigner added, “It is really hard to report on Exxon and big companies. We have to write to them, give them weeks to respond, and go through a bunch of legal checks.”

Overall, Gant said he stands by the contents of the report, of which he was an instrumental part in putting together, while stating emphatically that there is evidence to support every accusation made.

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Comments

  • guyaneseonline  On February 7, 2020 at 1:02 am

    Demanding a better deal for Stabroek Block was not priority for Govt. – Int’l law firm says
    Feb 07, 2020 Kaieteur News

    A report commissioned by Cabinet itself, reportedly in response to the Global Witness report, has found that the negotiation of improved terms for Guyana in the 2016 agreement was not a priority for the Government of Guyana. Those negotiations were led, on the Government’s side, by the Minister of Natural Resources, Raphael Trotman.
    Hired in September last to prepare a report on the circumstances surrounding the signing of the 2016 Stabroek license, the British firm Clyde and Co had been provided with the drafts of the 2016 agreement exchanged between the Ministry of Natural Resources and Exxon’s subsidiary, Esso Exploration and Production Guyana Limited (EEPGL).
    The currently unreleased report states that Clyde and Co analysed the points of agreement raised by each side.
    Government did make efforts to propose improved terms, but the report posited that the consortium was not receptive of its proposals. Yet, Government wanted to get the negotiations over with, in a short period.
    Clyde and Co found that the negotiations were limited, taking place over just the course of a month.
    While the Government could have approached the situation differently, through extensive negotiations on the agreement’s terms with a view of improving them, the authors of the report wrote “such an approach was not in the forefront of the Government’s mind.”
    Because of that, the Global Witness report now sees Guyana losing US$55B over the life of the agreement. It has urged a renegotiation.
    What the Government prioritised, according to Clyde and Co, was ensuring a continuity of its relationship with the Contractor consortium, ExxonMobil, Hess and CNOOC.
    As companies originating from two of the world’s most influential countries – China and the US – Government reportedly saw the companies as assets while it defended itself from Venezuela’s claim over two-thirds of its territory.
    It also worried that if it took a more aggressive approach, it would risk the oil companies rejecting the revised terms and relinquishing the acreage outside the discovery areas in June 2018.
    According to the report, the Government figured that Exxon would remain an operator in Guyana for a very long time, once exploration of the Stabroek Block turned out to be successful.
    Government also reportedly considered that Exxon had already held an interest in the Stabroek Block for almost two decades, and had stayed through the territorial controversies and an oil price crash which occurred in 2014, despite the large investment costs associated with the industry.
    On the other hand, Global Witness posited that, though protecting Guyana’s national interest is a fair consideration, it was not a justifiable reason to fast-track negotiations, especially at a time when Guyana could have waited for the details of the second Liza field discovery and strengthened its negotiating position. This is also buttressed by the fact that Government, according to Global Witness, rejected expert advice in multiple instances.

    • kamtanblog  On February 7, 2020 at 1:50 am

      Expert advice should be taken into consideration in negotiations especially
      as Guyana government may lack the expertise
      or experience in negotiations with multi nationals.
      Yes terms should certainly be renogiated now
      as new discoveries are made public.
      It is a case of work in progress but with
      elections it may be wise to await results
      before doing so.
      Not long to go now with 2nd March D day !

      After results of elections are known the elected
      should have the mandate to renegotiate
      terms and conditions of any previous
      government contracts.
      Politricks before economics.
      Horse before cart.?

      Is anyone monitoring how many barrels per
      day is being extracted ?
      Send in government regulators/auditors to
      monitor production.
      It’s not rocket science or trade secrets.

      Go Guyana go

      Kamtan

  • Trevor  On February 7, 2020 at 11:57 am

    So vote for Bharat Jagdeo to steal the oil monies and build not Pradoville mansions, but Pegasus skyscrapers that would make Trinidad look like a mud hut?

  • jim  On February 9, 2020 at 7:56 pm

    Over 250 billion barrels of oil alone in the Stabroek Basin…

    • kamtanblog  On February 10, 2020 at 12:02 am

      Question
      Who is monitoring production ?
      Who is marketing and at what price ?
      Will Guyana join opec as it’s now major
      oil producer ?
      Google opec FMI
      Observe what happened to Venezuela
      after nationalisation?
      Oil is traded in USD $ …when CIA tin pot
      dictator Sadam renegaded on petro $
      he was removed.
      Will Maduro be removed ?
      Too many unknown quantities therefore
      it’s “speculation” !
      Guyana is new kid on the block !
      Be aware beware the 2nd March
      Et tu Guyana

      Kamtan

      • jim  On February 10, 2020 at 7:52 pm

        I’m not going to entertain conspiracy theories, whether it is true or not.

        All that I know is that Occidental is planning to explore for oil once the Venezuela issue is settled in court. The previous owners estimated that there could be almost 35 billion barrels of oil equivalent in the block.

      • kamtanblog  On February 10, 2020 at 11:34 pm

        Jim
        Post election results am sure oil deal with exon
        will be re-negotiated regardless of what happens politically.
        Negotiations are “work in progress” subject
        to “terms and conditions”
        As you suggested others will be invited
        to participate in Guyana oil industry/development.
        The economic not the political decisions
        is what matters most.
        My gut feeling is that Guyana may decide
        to join opec to market its oil.
        Early days !

        Q
        Why has USA not invaded Venezuela and
        replaced Mad-Uro as yet ?

        Go figure

        Kamtan

  • brandli62  On February 10, 2020 at 6:54 am

    I share Kamtan’s view that renegotiation of the Exxon deal should be considered once the elections are over. However, renegotiations have to be carefully planned. Why do you want them? What do you want to achieve? What is wrong or inadequate with the current agreement? Can you make a point that Exxon has granted better conditions to other countries? Rushing into renegotiations with out a clear plan and strategy will otherwise only end in a debacle and undermine the credibility of the Guyanese government. Regarding the criticism raised in the “Signed away” report of Global Witness, they make some good points, but in hindsight things always look different than at the time of the negations. From my point of view, the bargaining power of the Guyanese government was limited given Venezuela’s territorial claims. Every private investor will think twice, if his/her investments might go up on smoke or become stalled for years due to territorial disputes. Secondly, the Guyanese had not alternative investor to negotiate an alternative deal. Finally, the lack of any oil production infrastructure and expertise made also weakened the Guyanese negotiation position. Overall, I think it was good to get the oil project started with a reliable and powerful partner, like Exxon. Not all off shore blocks are controlled by Exxon, hence better conditions can be negotiated, once oil is struck in these blocks. Over time, the Guyanese will learn this new trade and improve their negotiation skills. By the way, the “Signed away” report stated that they found no evidence for corruption. This is already some very good news. Let hope that the next government will stay on this path.

  • jim  On February 10, 2020 at 7:55 pm

    The Anadarko block (now being transferred to Occidental) is under dispute by Venezuela because of the Essequibo claims.
    The oil block is currently being considered for exploration after the International Court makes a verdict on the matter.
    The previous owners of the block made an estimate that there could be at least 35 billion barrels of oil minimum in the block, and using a 50% confidence interval, this estimate could rise as high as 80 billion barrels of oil and gas equivalent.

  • brandli62  On February 11, 2020 at 3:00 am

    If these estimates are only true to 50%, this would put Guyana at 50’000 barrels per capita on top and ahead of Kuwait by a factor of two. Truly mind-boggling!

    • kamtanblog  On February 11, 2020 at 3:11 am

      With population of Kuwait at 4M
      Guyanese should be 4 times richer !
      Really ?
      How much is a loaf of bread in Kuwait ?
      Darwin’s theory of relativity re-incarnate.

      Will all 7.5k guyanese become millionaires
      ?

      Get real !

      Kamtan

      • Trevor  On February 11, 2020 at 7:11 pm

        I hope so. Exxon might know how much oil is there in the offshore. As a matter of fact, there are rumours that Exxon already knows how much oil is offshore but is doing these gradual oil discoveries for some reason. One guy at Schulumberger told me that there could be double-digit billion barrels of oil around the Suriname border. Guyana got plenty oil but will we be rich?

      • kamtanblog  On February 12, 2020 at 12:16 am

        Trevor
        Are all Trinidadians rich ?
        POS is a no go city after dark.
        Drugs and guns have taken over control
        of the country. Tourists now go to Tobago.
        With oil wealth comes the “side effects”
        of any drug…legal/illegal.
        Yes Guyana will be rich
        But only the few not the many.

        In my opinion
        Hope I am wrong !

        Time will tell

        Kamtan

      • brandli62  On February 12, 2020 at 2:03 am

        Kamtan, it’s early days. Let’s wait to 2030 to make conclusions. Kuwait is pumping oil since 1946….. It has a 75-year head start!

      • kamtanblog  On February 12, 2020 at 2:29 am

        Am an oil sceptic !
        Sometimes it best to leave oil in ground
        by controlled production.
        That way it will never finish/run out.
        Norway only extracts what it needs
        to balance its economy.
        Does Guyana need all that oil wealth
        immediately or are they in control of
        it’s extraction.
        Who controls Kuwait’s oil ?
        Who will control Guyana’s oil ?

        He who pays piper calls tune

        Remain sceptical

        Kamtan

      • brandli62  On February 12, 2020 at 2:57 am

        Given that the oil is offshore and has to be pumped into boots, the rate of oil production will be limited by these circumstances. This is similar to Norway, where the oil is also offshore. In addition, for most of the other offshore blocks there has been no drilling activity to date. I would also caution that the oil wealth will not come all at once. Remember, Exxon’s investments have to be recovered, before more revenue can be shared with the Guyanese government. I would not be surprised, if the Guyanese oil reserves will last for the next hundred years.

      • kamtanblog  On February 12, 2020 at 3:08 am

        Interesting take !
        Q
        Who controls oil extraction ?
        Oil company or Guyana government ?
        Who controls oil extraction in Norway ?
        Who controls oil extraction in Venezuela
        Brazil et al ?
        Nationalised oil companies ?

        More questions than answers for me.

        Will newly elected govt in Guyana nationalise
        Oil companies?
        That is the political question.

        Sorry remain sceptical

        Kamtan

  • brandli62  On February 11, 2020 at 3:14 am

    Facts and time will tell, Kamtan. 😉

    • kamtanblog  On February 11, 2020 at 4:53 am

      Yep !

      Transparency and accountability !

      Not long now…..

  • Trevor  On February 12, 2020 at 1:05 pm

    Trinidad doesn’t have as much oil as we have. Our Stabroek Block is anticipated to have more oil than Kuwait.

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