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New oil find is no reason to rejoice but to weep – Chris Ram
Chartered Accountant, Chris Ram
USA oil giant, ExxonMobil recently announced that it has discovered more than 230 feet of high quality oil-bearing reservoir at the Ranger-1 well in the Stabroek block. This represents the sixth discovery in Guyana since 2015.
But Chartered Accountant and Attorney-at-law, Chris Ram believes that the latest oil find by ExxonMobil is not a reason to rejoice, but one to weep.
Ram stated there is no reason to be exalting when Guyana is saddled with a lopsided contract which the government allowed to be imposed on the nation in 2016. Ram said this means that the share of the natural resources is necessarily circumscribed by the terms and conditions of that agreement which includes a number of illegalities.
After reviewing the contract, the auditor opined that Natural Resources Minister, Raphael Trotman displayed complete disregard for Guyana’s laws. Ram asserts that the Minister takes “legal gymnastics” to new levels.
Ram said that the Petroleum contract makes mention of a “Bridging Deed.” The purpose of this agreement is to replace the 1999 Agreement and the 1999 Petroleum Prospecting Licence.
“Readers will recall that then President Janet Jagan signed the 1999 Agreement in violation of the Petroleum Exploration and Production Act (the Act) to the extent that the company (Esso Exploration and Production Guyana Limited) was granted approximately 600 blocks instead of the 60 blocks permitted by law.”
The Chartered Accountant continued, “The 1999 Agreement and Prospecting Licence appears to have been contained in a single package and included a full description of the blocks and a map of the area allotted to the oil company. The 2016 Agreement merely states that on that date, Minister Trotman granted a Petroleum Prospecting Licence for an initial period of four years.”
Ram added, “In other words, the whole idea of Mr. Trotman was to pretend that the 1999 Agreement never existed. Trotman has to be given credit – This takes legal gymnastics to a completely new level.
Trotman obviously decided to complete the concealment of the 2016 Agreement by failing to comply with Section 16 (2) of the Act.”
Section 16(2) of the Petroleum Exploration and Production Act states: “The Minister, shall, as soon as may be practicable after a licence has been granted, cause notice of that fact to be published in the Gazette stating the name of the licensee and the situation of the land in respect of which the licence has been granted.”
The Attorney-at-law told Kaieteur News that Trotman failed to observe this aspect of the law. That is a worrying precedence, he added.
The auditor added, “Did Trotman decide that he could bypass the provisions of the legislation and do as he chooses? Clearly, he does not consider himself bound by any laws, and is free to violate them as he chooses.”
Ram also stated that a prospecting licence can only be granted on the basis of an application made in accordance with the Act. He said that the application must contain a whole range of information as prescribed by the Act and Regulations, including proposals for local content in terms of employment and the procurement of goods and services.
Ram identified another worrying part of the agreement.
“ExxonMobil has the upper hand because it has an agreement which says that the laws of Guyana only play a secondary role because it must now be consistent with the rules of international law and customs and usages of the international petroleum industry. Now who set up those customs and usages? Obviously, it is the oil companies themselves.”
He continued, “If one looks at Article 1.5 of the Agreement it says, ‘the provisions of the Act and regulations dealing with rights and obligations of the contractor shall be read as part of but not nullify the provisions of this agreement and any licence issued to the contractor.’
In other words, even if the licence and the agreement are inconsistent with the law, the law and regulations cannot nullify the contract. But that is unlawful…”
Ram added, “…So for me, the new oil find, when I hear about it, I don’t exult; I weep because it is not being developed for us but for the international oil operators. I notice that Trotman was excited but I thought that is for Exxon and their shareholders and employees…”
The Chartered Accountant said that ExxonMobil exploited the poor negotiating skills of the Guyana team and the inadequacies of Trotman. He said, too, that a number of environmental issues remain unaddressed yet there continues to be praises coming from the Government camp.
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