Beware of Exxon’s skillful non-compliance with regulations, penalties-Industry Experts

May 23, 2019 News

By Kiana Wilburg

ExxonMobil is one of the world’s most affluent oil companies with all manner of skills at its disposal. Therefore, if a country’s regulators and politicians are not vigilant and resolute in the decisions made, they could be easily outmaneuvered by this oil king.

Petroleum Consultant and Local Content Expert, Anthony Paul

Just recently, Oil and Gas Consultant and Local Content Expert, Anthony Paul, conducted an interview with the Columbia Center on Sustainable Investment (CCSI) where he shared an example of how Trinidad and Tobago’s regulators were outmaneuvered by ExxonMobil back in 2002.
Paul said that Exxon was able to skillfully avoid paying a hefty US$50M penalty it was slapped with after failing to honour a commitment to drill two wells.
The Industry Expert noted that even though the penalty was handed down by the TT’s regulators, Exxon did not accept it. Instead, the oil giant went above the heads of the technocrats and straight to the government to negotiate its own deal which Paul also highlighted, “had limited inputs from the technical or commercial experts.”
The negotiation turned out to be a success for Exxon as it was able to avoid paying the penalty. In exchange, Exxon said it would perform some seismic interpretation and development drilling in TT’s Trinmar acreage and partner with Petrotrin to produce any additional reserves it is able to identify.
During a follow-up interview with Kaieteur News on the foregoing case, Paul was careful to note that what he described to CCSI is not unique to TT, the oil industry, nor is it the sole domain of international firms.
The Energy and Strategy Advisor said that local companies and individuals engage in similar techniques to earn favour. While there are often legitimate reasons for sidelining established norms, Paul stressed that those doing so should always be doing it in the country’s best interest and should be able to demonstrate this to the public.
He said the lesson for Guyana and other countries new to oil and gas, is that, there will always be the need for a higher authority to make a decision ‘above the pay grade’ of operations personnel in the regulatory body.
“However, politicians should be assisted in making the right decisions and not let others play on their egos or lack of experience by having readily available the right tools and information to do so,” Paul stated.
The Petroleum Consultant added, “We cannot blame politicians for making the wrong decisions if those charged to regulate don’t anticipate and prepare for such conditions. In order to do that, regulators in new producing countries should themselves be prepared and assisted in developing these tools and procedures.”
PREVENTING UNDUE INFLUENCE /CORRUPTION
Paul said what is required for good governance, particularly where public goods or money are concerned, is a system of accountability, wherein those making decisions, do so in a manner that is consistent, transparent and auditable.
He said there should be Standard Operating Procedures (SOPs), with clear guidelines as to what factors are to be taken into account, what evidence must be presented/assessed and what criteria are used to evaluate and compare different options.
In addition, at each stage, there should be different individuals responsible for evaluating the situation and making recommendations for materially significant decisions and for approving same.
Both the level of value, subject to such procedure and the responsible individuals (either by office or role) should be clearly defined in SOPs.
Paul, who has 40 years in petroleum and mining, cautioned that companies are very good at understanding governments and establish very robust government relations pathways and procedures.
He said that they identify the key decision-makers and influencers and build strong inter-personal relations of trust between them and company employees/ contractors/ advisors/ partners, often to the level where those decision makers and influencers give more credence to the company relationship with the manager than to their own technocrats.
“So relationship-building works on very human characteristics, and is nuanced from country to country and from person to person. Therefore, power doesn’t always have to come from the barrel of a gun or from a bank book,” the Trinidadian concluded on this matter.

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