Govt. should approve no further projects until it can regulate offshore oil operations

Govt. should approve no further projects until it can regulate offshore oil operations – Mangal

Aug 12, 2019 News

The Government of Guyana should not have approved another project after Liza-1. It is moving too fast. With every project it approves, it does so to its detriment. Government should slow down, and should not approve any more, until it can properly oversee and regulate the operations of the contractors offshore Guyana.

Oil and Gas Consultant, Dr. Jan Mangal

This is the caution of Oil and Gas Consultant, Dr. Jan Mangal.
Recently, an Attorney-at-law, Melinda Janki had raised concern over an article of the Production Sharing Agreement (PSA) of the Stabroek Block, which allows the contractor to take as much oil for its operations as is reasonably required.
Article 11 of the PSA speaks about Cost Recovery and Production Sharing. Article 11.9 affords the Contractor the right to use from the production for its operations.
It states, “The Contractor shall have the right to use in any Petroleum Operations as much of the production as may reasonably be required by it there for and the quantities so used or lost shall be excluded from any calculations of Cost Oil and/or Cost Gas and Profit Oil and/or Profit Gas entitlement.”
The Contractors on the Stabroek Block are Exxon’s subsidiary, Esso Exploration and Production Guyana Limited (EEPGL); Hess Guyana Exploration Limited; and CNOOC Nexen Petroleum Guyana Limited.
Janki had contended that, because there is no cap on the amount the oil companies are allowed to take, and because Guyana does not currently have the means to oversee that process, the article is unfair to the people of Guyana.
“We have to get past the ugly truth of Guyana’s oil deal.” Janki had said.
In an exclusive interview with Kaieteur News, Dr. Mangal said that Janki is correct in raising this issue; that Government is not prepared to verify the claims of ExxonMobil, the lead operator on the Stabroek Block, that what they will take is reasonable. But more importantly, the Consultant said that this speaks to a much bigger issue: the fact that Government does not have the capacity to regulate the offshore operations of these offshore oil companies.
When Exxon first struck oil, “Government did not understand the obligations with regard to monitoring”, Mangal said.
But he maintains that the operations must be regulated.
“It’s up to Guyana to monitor and make sure it’s legitimate, to ensure what the contractor says it’s using is legitimate… No sane government would allow a business [to operate unregulated]… It’s the country’s oil. It’s the people’s oil.”
In June last, Dr. Mangal, who was once Government’s advisor on Petroleum, told Kaieteur News “Oil companies always want to pump everything as fast as possible…Don’t buy into the hype…”
He had said that, while it’s beneficial for an oil company to advocate for early production, as it would grant them quick returns on investment, it is highly unlikely to work for the country.
Every time Government approves another project, Dr. Mangal said, “[it’s] forfeiting billions of dollars of Guyanese money for no reason.”
ExxonMobil has already received approval for two projects. Liza-1 is expected to produce up to 120,000 barrels a day, and Liza-2, which is expected to startup mid-2022, is expected to produce 220,000 barrels a day. Exxon is currently seeking approval for a third, Payara.

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