Remaining oil blocks should be auctioned …or saved for future generations

Remaining oil blocks should be auctioned …or saved for future generations – Jagdeo

Mar 02, 2018 ExxonMobil, Features / Columnists, News

Opposition Leader, Bharrat Jagdeo

Opposition Leader, Bharrat Jagdeo, believes that another advisor should not be sourced by Government to determine how the remaining open oil blocks should be utilised.
At his weekly press conference, yesterday, Jagdeo said that Petroleum Advisor to President David Granger, Dr. Jan Mangal, has already indicated that the best approach to the remaining oil blocks would be to auction them.
“You don’t need to bring anyone in to tell you what your advisor already said, ‘Auction the blocks’. That is the best way that the government gets value,” Jagdeo stated.
The Government is in talks with several companies. It plans to select one to advise on the remaining oil blocks. Minister of Natural Resources, Raphael Trotman, has indicated that there is a ‘small’ number of unassigned blocks offshore for oil exploration.
Auctioning of oil blocks is nothing new in the oil industry because countries believe it brings the best value for money since operators compete to secure rights. Last year, Mexico moved to liberalise its industry by placing 19 oil and gas blocks for auction. The South American country is eyeing earnings of $93B from auction.
In the case of Guyana, considered a frontier oil nation, experts believed that auctioning the blocks prior to oil discovery would not have attracted great interest from firms. Guyana opted to allocate the blocks to investors based on one-on-one negotiations.
Mangal noted that this creates the serious risk of corruption due to the lack of transparency and accountability. He noted that most countries have abandoned this method as experts.
When ExxonMobil and its partners publicly announced the discovery of oil off shore Guyana in 2015, the game changed. According to Mangal, Guyana should no longer be awarding petroleum acreage via one-on-one negotiations after the Liza discovery in 2015.
Jagdeo outlined that Guyana could also decide to retain the unassigned blocks for future generations.
“You can say wait for the next ten years, we are not giving it out; we want to go to the Parliament because there is something that is called inter-generational equity and we are leaving these blocks for another generation,” Jagdeo stated.
Jagdeo has defended the decision by former President Janet Jagan who generously granted approximately 600 blocks to ExxonMobil and its partners via a signed 1999 Agreement in violation of the Petroleum Exploration and Production Act which stipulates a maximum amount of 60 blocks.