Latest update December 23rd, 2024 3:40 AM
Govt. to hire international law firm to negotiate future oil contracts
By Abena Rockcliffe-Campbell
What’s done is done.
The APNU+AFC Government has been taking that approach in the handling of the concerns being raised about existing oil contracts. The Coalition has been firm that there will be no reviews or renegotiations.
Presidential Advisor,
Dr. Jan Mangal’s
Minister of Natural Resources, Raphael Trotman
However, the government has vowed to ensure that the nation benefits from the establishment of better financial regimes in future oil contracts in order that higher revenues can be secured.
To this extent, Minister of Natural Resources, Raphael Trotman recently announced that the government will be hiring an international law firm to help with the negotiations of future oil contracts.
Minister Trotman’s comments came recently before the Parliamentary Sectoral Committee on Natural Resources.
Minister Trotman told the Committee that the “time is coming soon when we will have to issue some new licences but we will do so with the benefit of the services of an international law firm…They have worked up a list of international law firms and we are going to choose one of those soon.”
Minister Trotman said that Guyana seems to be on the radar of most major oil companies around the world.
The Minister told the committee, “We have received applications from a number of companies.
Minister Trotman said that some of these companies are “Total—the French major, ENI—the Italian major and Chevron—the American major. We are in discussion with Petrobras of Brazil; and, there are applications from Repsol and a few others.
Several recommendations were made to the coalition government for it to ensure that the remaining oil blocks are auctioned. However, based on the utterances, Trotman said that the government will not go down this path.
At one of his weekly Press Conferences, Opposition leader, Bharrat Jagdeo acknowledged that Petroleum Advisor to President David Granger, Dr. Jan Mangal’s recommended 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.
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 liberalize 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.
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.
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