Investigate Trotman, others in suspicious Stabroek Block deal

Feb 04, 2020 News

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…Minister sought but did not await expert advice – Global Witness Report

A damning report called, “Signed Away,” unambiguously states that Natural Resources Minister, Raphael Trotman, may have disregarded certain crucial pieces of advice.

The advice could have led to Guyana having a way better deal than the one in place with American Oil giant, ExxonMobil and its partners, Hess Corporation and CNOOC/NEXEN.
The report was prepared and released yesterday morning by international Non-Governmental Organization (NGO), Global Witness.
In light of this, and other glaring anomalies, the international anti-corruption body says, an immediate investigation is needed into the role Trotman and others played in securing a deal that leaves the country cheated out of US$55 billion.
According to Global Witness, the negotiations and subsequent signing of the ExxonMobil-Guyana deal was done quickly.
From evidence it saw, negotiations began April 4 or April 5, 2016 at the Exxon headquarters outside Houston, Texas.
Twelve weeks later, on June 27, the deal was done – signed away by Trotman, Exxon’s Vice President Erik Oswald, and representatives from CNOOC and Hess.
Further to this, Global Witness said it has been able to determine the roles played by three Guyanese officials during the Stabroek negotiations, although it is likely additional officials were involved.
These three were Trotman and the officials who visited Exxon on April 4 and April 5, 2016: Christopher Lynch and Newell Dennison, both with the Guyana Geology and Mines Commission (GGMC).
According to Global Witness, Minister Trotman was legally responsible for assessing and approving or rejecting Guyana’s oil licences.
Global Witness said that in August 2019, it had asked Trotman about his involvement in the 2016 Stabroek negotiations, to which he responded, was marginal.
Global Witness said there is some evidence to back up this denial.
Between April 28 and April 30, 2016 – after negotiations had begun – Global Witness said that Trotman and other officials met with Exxon at the company’s Texas headquarters.
The international NGO said that the trip was a glamorous affair.
The transparency body said, “Trotman flew first class, slept in pricey hotels, ate at Joule – Exxon’s exclusive Wolfgang Puck restaurant – and was chauffeured around in limousines.
“Exxon paid for it all. During this trip, it appears that the Minister and his colleagues did not negotiate a new Stabroek licence.”
Interviewed by Global Witness in July 2019, Trotman stated first that he did not visit Exxon during the Stabroek negotiations, then said he would need to check his notes.
The Minister subsequently sent Global Witness a memo summarising his late April 2016 trip, prepared by the visiting officials.
The memo shows Trotman did visit Exxon’s headquarters while a new deal was being discussed, but makes no mention of negotiations during the trip.
Instead, Trotman’s all-expense paid visit to Exxon’s Texas headquarters was spent listening to technical presentations and visiting a facility where drilling samples were kept.
“What was most striking,” the visiting officials wrote, “was the very strong smell of oil that filled the room, and which the geologist present indicated was a strong indicator of large deposits of oil on the Liza 1 well.”
Global Witness said it is not suggesting that Trotman’s Texas trip violates US or Guyanese anti-corruption laws. However, given the Minister’s legal responsibility for negotiating Exxon’s oil licence at the time he visited the company’s headquarters, Exxon’s apparent generosity does raise questions about the company’s compliance with its Gifts and Entertainment Policy.
Exxon’s Gifts and Entertainment Policy states, in part, that: “gifts and entertainment are permissible when the gifts and entertainment serve legitimate business purposes, are not intended to improperly influence the recipient, are consistent with the applicable social norms and are in conformity with applicable laws, regulations, corporate policies, corporate guidelines, and corporate procedures.
“Employees should also consider factors such as the potential to improperly influence pending business decisions and whether the level of gift or entertainment is appropriate for the position of the person receiving and providing it, and the opportunity for reciprocity. Transparency and the exercise of good judgment are basic expectations.”
Asked in July 2019 whether he felt uncomfortable having Exxon pay for such a luxurious trip, Trotman told Global Witness that he did not because other Guyanese officials were with him.
A December 2019 request by Global Witness for further comment went unanswered. In addition to this, Global Witness asked Exxon in December 2019 whether paying the expenses of a minister who would later sign its Stabroek licence complied with its Guidelines.
It also asked who approved these expenses and if a rationale for their approval could be supplied.
Exxon only responded that it was “committed to the highest standards of business conduct.”
Further to this, Global Witness said it has seen a list of Guyana’s negotiation terms that were authored by Trotman and dated just before he signed the Stabroek licence in 2016.
The NGO said that these terms demonstrate that as of late June 2016, the Minister was failing to ask for a sufficiently good deal.
Global Witness pointed out that Trotman’s key terms included a two percent royalty on all of the oil produced while noting that there was no push for an increase in the 50 percent production share contained in the 1999 licence.
In total, Global Witness said that the Minister’s position was that Guyana should obtain a 52 percent share of Stabroek revenues, far below the IMF’s suggested 65 to 85 percent.
Trotman’s terms also included that Guyana should receive an US$18 million signature bonus and US$2.1 million in annual fees, including US$800,000 for environmental and social protections.
For a deal ultimately worth nearly US$325 billion, Global Witness said these terms were paltry.
Significantly, the Global Witness pointed out that Trotman had reason to know that his Stabroek negotiation terms were weak.
On Friday June 24, 2016 prior to signing the deal, he sent the terms to an oil industry expert for review. Working quickly, the expert responded on Monday June 27.
In a brief, the expert told Trotman that Guyana needed far more information about the value of Stabroek and what a fair deal would be.
Around the same time, Trotman requested advice from a second oil expert. According to the expert, he also told Trotman that the government needed more information about the economics of Stabroek before signing.
He even suggested where Guyana could get money to hire advisors.
The Global Witness said that both sets of recommendations were apparently dismissed.
Further to this, the Global Witness noted that on June 27, only one business day after Trotman sent his request to the first expert and the same day the expert replied, the Minister signed Exxon’s licence.
Global Witness said that the final deal largely mirrored the same generous fiscal terms Trotman had offered earlier in June, although the company had reduced its annual environmental and social obligations from US$800,000 to US$300,000.
Considering the foregoing, the Global Witness strongly advocated for the Guyana government to renegotiate Exxon’s Stabroek oil licence.
It said that the government should seek a share of revenue that equates with international standards, increasing Exxon’s financial obligations such as royalty and income tax payments.
Prior to negotiations, it said that the government should commission an independent evaluation to determine what the country deserves from the licence, although it believes a minimum equitable share of oil revenue for Guyana would be 69 percent.
Further to this, it said that the Guyana government should investigate the process by which the Stabroek licence was negotiated.
It said this should include a review of whether an apparent conflict of interest prevented Raphael Trotman from fully negotiating in the best interests of the country.
And finally on this matter, it said that the US State Department should support Guyana by encouraging Exxon to renegotiate with the country.

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