Anti-corruption watchdog sheds light on ExxonMobil’s questionable deals with Nigeria

Mar 10, 2017 News

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With the coming of an oil sector that is expected to bring Guyana great wealth, the Government of the day has been paying close attention to the mistakes made by other nations such as Trinidad and Tobago.

However, some anti-corruption advocates are also urging that perhaps the coalition administration and even the citizenry would be wise to pay keen attention to the case of Nigeria and Exxon Mobil.
Shedding a light of transparency on this matter is the Global Witness (GW). This is an international organization that conducts in-depth investigations in an effort to expose and fight off corruption in the environmental sector. It also exposes the abuse of human rights.
The body documented its findings between Nigeria and Exxon Mobil in a report titled Probe into murky ExxonMobil deal shows why strong U.S. transparency rules are needed for oil companies.
The report said that a major oil deal which was inked between ExxonMobil and the Nigerian Government is being investigated by Nigeria’s Economic and Financial Crimes Commission (NEFCC).
According to the Global Witness, the probe centres on a controversial deal agreed to by ExxonMobil and the Nigerian Government in 2009 to renew three lucrative oil licences, which at the time accounted for around 25 per cent of Nigeria’s entire oil production.
The Global Witness said that ExxonMobil reportedly agreed to pay US$600 million to renew the licences and to construct a power plant at a cost of US$900 million to the company.

However, documents seen by the Global Witness indicate that the Nigerian Government may have valued the licenses at $2.55 billion, and that the Chinese oil major Chinese National Offshore Oil Corporation (CNOOC) offered to pay $3.75 billion for the same licences – over six times the amount reportedly paid by ExxonMobil.
In Nigeria alone, an estimated US$400 billion in oil revenues has been lost to corruption and mismanagement since 1960.
According to the Global Witness, media reports state that Rilwanu Lukman, Nigeria’s senior-most Oil Minister at the time of Exxon’s deal, refused to endorse the agreement, stating that in his opinion, the US$600 million renewal fee was too low and would deprive Nigeria of the full benefits of the licences.
The Global Witness said that the difference between Exxon’s reported renewal fee and CNOOC’s counter-offer of US$3.75 billion is more than Nigeria’s entire health and education budget combined.
Global Witness approached ExxonMobil with a request for comment on the Nigerian deal. According to GW, the US Company stated that following extensive discussions with the Nigerian Government to renew the licences, an

agreement was reached and legally executed.
In reaching the agreement, ExxonMobil fully complied with Nigerian law.
Minister of Foreign Affairs, Carl Greenidge, has since expressed that he is “absolutely confident” that oil giant, ExxonMobil will cooperate with Guyana when it comes to the nation’s application for membership with the Extractive Industries Transparency Initiative (EITI).
He made this, among other statements, during a recent interview.
Greenidge’s comments come in wake of the fact that the coalition administration has taken note of the recent action by U.S. President, Donald Trump to repeal a key piece of disclosure law which no longer strong-arms American companies in the extractive sector to divulge what they are paying to foreign governments.
The Government has also acknowledged that Trump’s action will have an impact on all countries which are implementing the principles of the Extractive Industries Transparency Initiative (EITI).
One of the key requirements of any country that is part of the EITI fold is to allow scrutiny of Government’s records of what it receives from companies in the extractive sectors. Guyana is currently applying to be part of the EITI.
While Trump’s action could have an impact on Guyana’s application, and all countries implementing EITI principles and standards, the Government is saying that the impact would not be a “fatal one”.
Greenidge who is advising Government on the matter said that he is sure the administration would have Exxon’s support when it comes to the EITI principles being implemented here.
The Foreign Affairs Minister said, “The point I want to make is that Exxon is a large multibillion-dollar company. It is a company which has commercial obligations in relation to its shareholders and to the market place.
“It also has responsibilities as a corporate entity. We are not starting from the assumption that they will not cooperate because they no longer find themselves in a position where they have a gun to their head from the USA to disclose certain information.”
Greenidge continued, “We have a good relationship with Exxon. And given their activities here, we expect that it will be pretty profitable. From where I sit, we are not anticipating any malfeasance. We need to remember that they started working with us in difficult times.
“So in terms of the way forward, I am not worried. I believe we will continue to seek to have a cooperative and fruitful relationship and on both sides. We will respect best international practices.”
Since the law was repealed by Trump, it has attracted much criticism from anti-corruption bodies, including EITI. In fact, Chairman of EITI, Fredrik Reinfeldt, has since spoken against Trump’s move.
Reinfeldt said that the law, which had allowed for American companies to disclose what they are paying foreign governments, was a complement to the EITI disclosure requirements.
He added, “I reiterate earlier held EITI positions on this matter. Our aim is to ensure responsible and transparent resource governance and this requires multiple efforts. The SEC (Securities and Exchange Commission) took great care in drafting these rules in consultation with industry to ensure that they complement the EITI’s efforts and avoid unnecessary duplication. I would urge Congress to consider this matter thoroughly, and to ensure that any action does not undermine the hard-won gains in this arena.”

GUYANA’S APPLICATION
With the emergence of a multibillion-dollar oil sector, the government is of the belief that EITI is necessary. As such, it is doing everything possible to safeguard the earnings from oil and gas by working to fast track Guyana’s application to EITI.
The Government’s action in this regard is spurred particularly by the declaration of significant oil finds by one of the richest American oil companies in the world, ExxonMobil.
Should Guyana become a member of EITI, it will be required to ask all companies in the extractive sector, including Exxon Mobil, to reveal what it is paying the government, among other things.
While there are a few more stages left to go through, Guyana certainly made significant headway recently as it relates to its application for membership to the EITI with the launching of Guyana’s very own Multi-stakeholder Group (MSG). This is one of the requirements for Guyana to make it into the EITI fold.
Speaking to the importance of the initiative, Dr. Rudy Jadoopat, National Coordinator of Guyana’s EITI Secretariat, said that EITI brings together a number of groups.
He said that these include oil and gas companies, representatives of government, local and international stakeholders and assessment management companies.
The National Director stressed that the objective of the EITI is to bring international and acceptable standards for transparency to the oil, gas and mining sector.
The National Director said: “EITI creates opportunities for the building of trust among stakeholders and indeed the community at large.
”Companies are required to disclose what they pay to government and the government must in turn disclose what receipts from the companies are made.”
”These figures are then compared to discover any discrepancies, and the information made public as a way to foster public scrutiny and greater accountability over natural resource profits earned by governments…”
The Director said, too, that Guyana has already satisfied a number of requirements. However, there are still a few steps which need to be completed. These include adapting the terms of reference of the MSG, determining the materiality and scope, to review and finalize a draft work plan, to prepare a communication strategy and plan for it, to review and ensure the finalization of the scoping study which was commissioned and prepared by a consulting firm etc.
The National Director assured that the Secretariat will provide support to the MSG.

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