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What happened with Kaieteur, Canje Blocks was daylight robbery – Dr. Mangal
By Kiana Wilburg
Oil and Gas Consultant, Dr. Jan Mangal, is of the firm conviction that the award of the Kaieteur and Canje Blocks by the Donald Ramotar administration just days before the General and Regional Elections 2015 amounts to daylight robbery.
Oil and Gas Consultant, Dr. Jan Mangal
During an exclusive interview with this publication, the former Petroleum Advisor to the Government said, “The issue with the Kaieteur and Canje is one of possible corruption. No country awards these two huge blocks next to a highly prospective block like the Stabroek Block just days before the results of a wildcat well are announced (ie Liza 1), and just days before a general election.”
Dr. Mangal added, “And no country awards these blocks to completely unknown and unqualified companies like Mid-Atlantic and Ratio. If one looks at the evidence from Nigeria, Liberia, etc, what happened in Guyana with the Kaieteur and Canje Blocks was daylight robbery.”
The Oil and Gas Consultant told Kaieteur News that the people of Guyana were robbed of billions of US$ by their politicians and the private sector. He said, “The people of Guyana need to become active and take an interest in how their heritage is being squandered. El Dorado has been forfeited before our eyes. And what are we doing about it? Nothing!”
PRECONTRACT COSTS
Just recently, Kaieteur News exposed how the contract signed between the Donald Ramotar administration and ExxonMobil for the Kaieteur Block leaves the nation saddled with $31.4M in pre-contract costs.
The Production Sharing Agreement (PSA) does not give any details on how this sum was arrived at. It only states, “The sum of US$150,000 (is) in respect of all costs incurred by Contractor prior to the Effective Date.”
According to Ratio’s website: https://www.ratiopetroleum.com/en/projects/guyana/, Exxon holds a 35 percent interest in the Kaieteur Block which totals approximately 13,535 sq. kms. It is also the lead operator.
Holding 25 percent of the rights is Ratio Guyana limited which was renamed Cataleya Energy Limited. It should be noted that Ratio Guyana Limited represents a joint venture partnership between ExxonMobil subsidiary Esso Exploration and Production Guyana Limited (EEPGL) and Cataleya.
Cataleya on its own, holds 25% of the petroleum rights in the Block while Hess holds 15%.
The Kaieteur Block is particularly significant since it is adjacent to the Stabroek Block, where the Liza discovery was made by ExxonMobil in 2015. Liza was the first oil discovery in Guyana and 11 additional discoveries have since been made in the block area.
To date, the total proven reserves in the block amount to more than five billion barrels of oil.
Esso’s Head of Public and Government Affairs, Deedra Moe, confirmed that an environmental baseline survey is being pursued on the Kaieteur Block to get a sense of the current conditions. She said that this has to be done before planning for future drilling.
Further to this, Moe said that this survey is in keeping with the fact that the company has work commitments on all of its blocks. “And we make sure we’re fulfilling those commitments,” added the official.
GIVEAWAYS
The Kaieteur Block operators were also able to capture very favourable terms in the contract that it signed with the Ramotar administration.
Exxon and its partners enjoy the right to use as much production as may be needed in its Petroleum Operations in the contract area and also for transportation and terminal systems. All quantities of any discovered oil so used or lost would be excluded from any calculations of entitlement.
The Contractor also enjoys the right to send abroad, via an export point chosen, all petroleum to which it is entitled to free of any duty, tax, or other financial impost and to receive and retain abroad, all proceeds from the sale of such petroleum.
The Kaieteur Block operators were able to secure in the PSA, provisions which allow it to be free of paying import duties on all equipment and supplies for operations. And these can all be freely exported when the operators are ready without paying any duties.
As it relates to taxation, the Kaieteur Block PSA says that the contractor, its shareholders, members, partners, or affiliated companies are subjected to no tax payments, save and except for income and corporate tax. They are also exempted from the Property Tax Act.
While the PSA only allows Guyana to benefit from a one percent royalty, the PSA states that the Minister may remit in whole or in part or defer payment of any royalties payable by the contractor.
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