More research needed to ensure awards of Kaieteur, Canje blocks were above board

Feb 05, 2020 News

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– Global Witness Report

By Kiana Wilburg

While the corruption fighting body, Global Witness, unequivocally states that it does not have evidence proving that the Kaieteur and Canje Block licenses were awarded illegally, it still recommends that the local authorities conduct more research to ensure, beyond the shadow of a doubt, that the awards were above board.

Global Witness made this call in its damning report called “Signed away.” That document which was released on Monday, places under the microscope, the lopsided Stabroek Block deal which sees Guyana being cheated out of US$55B due to poor negotiations Minister of Natural Resources, Raphael Trotman conducted with ExxonMobil.
The report also placed the spotlight on the Kaieteur and Canje licenses which were awarded to four companies by former President Donald Ramotar before he lost the General and Regional Elections to the APNU+AFC coalition in May 2015.
The Kaieteur license was granted to Cateleya Energy Corporation (CEC) (formerly Ratio Energy Limited) and Ratio Guyana Limited, a subsidiary of Ratio Petroleum Energy Limited Partnership headquartered in Israel. The Canje license was awarded to JHI Associates Inc. and Mid Atlantic Oil and Gas. But these companies are not the operators of the blocks they were awarded, ExxonMobil is.
The acquisition of the majority interest by Exxon is what concerns Global Witness. It is not clear to Global Witness, whether ExxonMobil did enough due diligence to ensure it was buying into legally awarded blocks.
Global Witness said it sent a request for comment to Exxon regarding its purchase of shares in Kaieteur and Canje. But the company provided only a broad statement regarding Global Witness’ findings. Exxon said, “We consider the accusations unfounded and baseless. ExxonMobil is committed to the highest standards of business conduct, and we follow all local laws and regulations wherever we operate.”
Apart from issues of due diligence, the Global Witness was particularly concerned that the companies that were awarded the licenses, had little to no experience in the oil industry.
KAIETEUR’S INVESTIGATION
Prior to the Global Witness report, Kaieteur News was the first to seek answers on whether the awards of the oil blocks to the four companies were above board. In this vein, this newspaper interviewed Commissioner for the Guyana Geology and Mines Commission (GGMC), Newell Dennison, who was central to the said awards.
Dennison was keen to highlight what Guyana’s laws state as to who qualifies to have a license in the oil industry.
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).” (See link for the Act: http://parliament.gov.gy/documents/acts/8170-act_no._3_of_1986_petroleum_(exploration_and_production)_act_1986.pdf)
Considering this, Dennison said that newcomers, particularly the small companies which were granted licenses received same in accordance with the foregoing law. He had further noted that apart from this, GGMC even went above and beyond by doing due diligence and holding several rounds of discussions regarding the proposal and work plan of the small companies as it relates to raising financing and attracting more operators.
The GGMC Commissioner said, “We have entertained people who did not have an established presence like other majors but, they came and were able to bring the expertise and a solid financing programme to the table. CGX is a typical example of that. When it came, it brought experts who were well known in Calgary; it brought the financier, John Cullen, and was able to say, ‘while we are not a company that has 40 years experience in the game, we are going to form this consortium which has cumulative experience in drilling, geology, business, geophysics etc.’ and that is one way we have been able to get people to the table in the early stages to explore Guyana’s basin.”
Looking to awards made after the 90s, Dennison pointed to the offshore concession that was granted to Ratio Petroleum of Israel and Ratio Energy Limited in Guyana. The Commissioner noted that Ratio was in talks with the Government for the Kaieteur Block licence since 2012.
He said, “Their application had been in the pipeline for a long time…They came with their people and put their proposal to us and our team hammered it out to a T. After rigid due diligence, passing our litmus test, we were satisfied that they were legitimate, that they were going to do legitimate work and attract the funding and oil majors to get the job done.
And this was way before we even conceived the notion of becoming an oil nation. They were also willing to take the risk, knowing that they could only explore 40 percent of the block.”

 

 

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