Guyanese should have a piece of every oil block – TT Expert Anthony Paul

Dec 15, 2019 News

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By Kiana Wilburg

“The oil blocks belong to the people of Guyana. Therefore, you should behave as owners and controllers of your own destiny, of your resources, as opposed to beneficiaries of someone’s goodwill. Only then you get a very different outcome. Never forget that!”
Those sage words were advanced by Trinidadian Local Content Expert, Dr. Anthony Paul, as he impressed upon the need for Guyanese to not just settle for jobs in the oil industry but also become investors in the oil blocks.

During an exclusive interview with this newspaper, the Energy Advisor said that he even made this recommendation in a report he had done on the behest of the United Nations Development Programme (UNDP).
In his report, Paul said that as soon as the discovery was made in 2015, the Guyana Government should have retained equity in every block. Whether they chose to vest that in a National Oil Company or sell it to Guyanese investors after it has been de-risked and proven productive is another matter.
In terms of whether private Guyanese companies should be contractors of the blocks, Paul answered in the affirmative. He expressed the view that Guyanese should be given a chance at ownership provided that they meet the required criteria, that is, they have the financial and/or technical capability to bring value to the activities needed.
He said, too, that they could be the sole investors if they have all the requisite capabilities or a joint venture investor if they have limited capacity.
The Energy Advisor was adamant that there are no cons if Guyana retains equity from the outset.
“Where there is limited capacity, you can ask foreign companies to make offers for a certain amount, say 80%, which they earn by investing in exploration. You can say to companies, ‘Pay for your right to get a share.’
“They take all the risk. Guyana then comes in and can raise capital for low risk development and production. So there are no cons to this.”
As for the advantages of having Guyanese with interest in the blocks, Paul said that it gives Guyanese a seat at the decision-

making table. As an equity owner/investor, he posited that they have the right to select senior management, see all the books and contracts, have their own people be part of the operations, have a say in the procurement, know exactly where the money and oil go, and overall, just learn so much more about the international side of the business. .
University of Houston Instructor, Tom Mitro, also expressed similar sentiments. He noted that awarding blocks to nationals who are new to the industry and have a small company is not unusual.
As a consequence of being a new entrant, Mitro said it is expected that the small company would end up relying on a larger oil company coming in to do work and provide the finances. While this partnership allows for the transfer of skills, he said that it has to be guarded against those who may seek to abuse the process.
During a recent interview with this news agency, former Natural Resources Minister, Robert Persaud, also supported the position for Guyanese to be investors in the oil blocks while reminding that this is catered for in Guyana’s law.
Guyana’s Petroleum Exploration and Production Act says, “No licence shall be granted to an individual unless he is a citizen of Guyana or to a body of persons, unless it is – (i) a company; or (ii) a corporation. A licence may be granted to two or more persons associated together in any form of joint arrangement, if each one of them is qualified to hold the licence under subsection (1).”
This provision is also similar to what is obtained in the legislation and Local Content Policies of other nations such as Canada, Ghana, Nigeria, and Russia.
In Ghana, for example, its Local Content Policy ensures that indigenous companies are afforded first preference in the grant of petroleum agreements or a licence with respect to the undertaking of petroleum exploration and production.
It was this very provision that allowed Springfield Group, a Ghanaian firm, to make two discoveries totaling 1.2 billion barrels of crude. The company which has no exploration track record anticipates the finds to be bigger than Ghana’s Jubilee field.
Of the 1.2B barrels of proven reserves, 30 to 35% are recoverable. Commercially viable quantities of gas have also been discovered. (See link for further details: https://africaoilandpower.com/2019/11/18/springfield-group-discovers-oil-in-ghana/)
In the case of Guyana, there are only two oil blocks (both operated by ExxonMobil) with Guyanese participation present. There is Mid-Atlantic Oil and Gas holding, a 12.5 percent interest in the Canje Block, and Cataleya Energy Corporation which has a 25 percent working interest in the Kaieteur Block.
As it awaits the commencement of its drilling programme for 2020, Cataleya has pursued several Corporate Social Responsibility projects, with the largest of them being the establishment of a US$1.25 million reservoir in Nappi, Central Rupununi, Region Nine.
With the capacity to hold 4.5million cubic metres of water, the reservoir is considered an essential project as it aims to reduce the vulnerability to drought while building resilience in Nappi and the neighbouring communities.
The Nappi Dam Project has received high praise from the Granger administration for being a commendable Corporate Social Responsibility initiative.

 

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