Background checks on all oil companies will feature in next licensing round -Dr. Bynoe assures

Feb 17, 2019 News

By Kiana Wilburg

When the Energy Department initiates another licensing round for offshore blocks next year, background checks will be done on all competing companies.
This assurance was given by Energy Department’s Head, Dr. Mark Bynoe.
Kaieteur News then asked what would be done with information that points to an oil company’s involvement in corruption.
Dr. Bynoe said he could not say at this time, what would be done with that information or how it would be used. He said that the Department is still working through how it will do the licensing round, which would likely be an open bidding process.
The Department Head stressed, nonetheless, that the requisite safeguards would be in place for the licensing round scheduled for the first quarter of 2020.
Several local and international transparency advocates have called for Guyana to ensure due diligence is done on oil companies for any future licensing round.
The Natural Resource Governance Institute (NRGI) for example, has warned that a company involved in the award process, one that has a reputation for, or a record of participation in, corruption or other misconduct should be seen as a major red flag by governments.
NRGI said this could suggest that the company has a propensity to engage in problematic business practices, or that officials treats it with favoritism.
NRGI said, “Of course, some companies may be wrongly accused by their rivals. (However), the level of scrutiny prompted by this red flag should depend on factors such as the reliability of the evidence or how often the company…has been accused.”
As for the Global Witness, this anti-corruption NGO has stressed time and again, on the importance of countries doing proper due diligence before handing over its oil resources for exploitation to the best bidder.
The Global Witness has stated that selecting the best companies with good track records on environmental and social protection, and the financial and technical capabilities to extract the maximum amount of oil with the minimum of harm is essential.
It said, “Poor or corrupt allocation processes can lead to companies without the relevant expertise, or with no intention of extracting themselves, gaining rights to exploit a country’s natural resources.
“In the worst cases, rights can be handed to companies, which represent corrupt interests leading to poor contract terms, delayed production and lost revenues for the host government.”
Closer to home, Chartered Accountant and former Auditor General, Anand Goolsarran, has said that he fully supports the approach of competitive bidding for offshore blocks since it includes conducting detailed background checks of companies bidding for the oil blocks.

Energy Department Head, Dr. Mark Bynoe

Goolsarran stated that one of the interested companies in Guyana’s offshore acreage is Petrobras, a Brazilian State-controlled company, which was embroiled in the largest corruption scandal in the history of that country that led to nation-wide protests in 2016 and contributed to the impeachment and subsequent removal of the Brazilian President Dilma Rousseff.
He noted that the scandal, uncovered during a money laundering investigation nicknamed “Operation Carwash”, involved inflating contracts for construction and service works and “kicking-back” the difference, estimated at US$3 billion, into the personal bank accounts of senior executives of Petrobras, certain political figures, and the ruling party to fund its election campaigns.
The Chartered Accountant said, “We must therefore be extremely careful in our selection process and ensure that the terms and conditions of any new agreement represent the best interest of the country.”
In addition, Goolsarran said that in going forward, the Government should endeavour to not repeat the mistakes made in relation to the Production Sharing Agreement with ExxonMobil.
He said, “We must also ensure that the related legislation and regulations, including our Procurement Act, are revised or amended so that any decision on the allocation of the remaining oil blocks is supported by legislation.”

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