Because of oil giant’s ‘bad’ history…There must be no secret deals with Govt. officials and Petrobras – Dr. Jan Mangal

May 13, 2019 News

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By Kiana Wilburg

 “When it comes to oil companies, they have mostly all been involved in corrupt practices, but Petrobras’s recent history is pretty bad…we need to be careful with this company…” – Oil and Gas Consultant Dr. Jan Mangal

Almost all major oil companies come with a history that is stained by allegations of, and in some cases, proven cases of corruption. But when it comes to Brazil’s state-owned oil company, Petrobras, some transparency advocates indicate that Guyana needs to be extremely wary.
Petrobras was at the heart of Operation Car Wash, a corruption scandal that is deemed to be the most infamous in the history of Latin America as it led to the conviction of 93 officials, two of which were former Brazilian presidents Luiz Inácio Lula da Silva and Dilma Rousseff.

Operation Car Wash started in 2014. The name was chosen because the alleged masterminds of the scheme used a currency exchange and money transfer service at the Posto da Torre (Tower Gas Station) and lava jato (car wash) in Brasília to move illicit payments.
Initially a money laundering investigation, Operation Car Wash expanded to cover allegations of corruption at Petrobras where executives allegedly accepted bribes in return for awarding contracts to construction firms at inflated prices. Petrobras had delayed reporting its annual financial results for 2014, but in April 2015, it released “audited financial statements” showing US$2.1 billion in bribes.
In light of this, Oil and Gas Consultant, Dr. Jan Mangal notes that Guyanese have to insist on complete transparency and open competitive processes for all dealings between their officials and Petrobras.
During an exclusive interview with Kaieteur News, Dr. Mangal said, “When it comes to oil companies, they have mostly all been involved in corrupt practices but Petrobras’s recent history is pretty bad…It was used by the Brazilian administration for political ends and theft…The politicians likely shoulder most of the blame, but we still need to be careful with this company.”
“We have to be careful with all companies, and we can do this by implementing transparent and rigorous decision making processes on our side which can stand-up to audit. We also need to understand the character of each of these companies, as they are all different, and we need to develop strategies for each.”
With companies like Petrobras rushing to Guyana’s shores for a stake in its oil wealth, Dr. Mangal said that there is going to be a great need for the authorities to run the sector transparently. He insists that there should be no secret one-on-one deals with Petrobras, or anyone, like there were in the past with the Kaieteur and Canje blocks, to name a few.
“And when Guyana is ready to auction (any offshore block), it must be handled independently and transparently. If Petrobras succeeds in such conditions, then great. But I doubt Petrobras can succeed if there is a level playing field because they are not known in the industry to be one of the best operators. Although they do have unique technical capabilities in ultra-deep water and sub-salt, they are not particularly efficient. If they want to farm-in to a block as a non-operating partner, then fine. They may be a good partner but unlikely to be a good operator,” expressed the transparency advocate.
Just a few weeks ago, Petrobras Executives had presented the government with a strategic plan for the sector. Petroleum Advisor to Government, Matthew Wilks had explained that Petrobras was engaged because they are one of the few companies in the world which can operate in an ultra-deep area. He noted that when Guyana moves to the licensing round, Area C which is offshore Guyana will be part of that round and it is an ultra-deep area.
But even in this instance, Dr. Mangal said that the authorities need to be cautious. He said that the officials tasked with overseeing the sector must do their own independent research and audits of what is needed, then openly solicit proposals from numerous companies, not just one company. Dr. Mangal stressed that there is much interest from the major oil companies in Block C, and it must be auctioned properly to maximize the value to Guyana. He indicated that arbitrarily choosing one company will rob Guyana of significant value.
“But the way things seem to run in Guyana because of a history of incompetence in all governments is that our officials sit and wait for whoever comes along with a PowerPoint presentation and then they treat it as though it is the best thing since sliced bread,” the Consultant noted.

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