Govt. misleads nation with centre-spread ad using Rystad’s “unjustified” figures

Feb 09, 2020 News

On Monday, international anti-corruption body, Global Witness, released a report called “Signed Away” which places under the microscope, the poor fiscal terms of the Stabroek Block deal.

Chartered Accountant, Chris Ram

Upon examining that report, the government has responded with a centre-spread advertisement in today’s newspaper. The advertisement relies heavily on comments recently made by Rystad Energy, a research and business Intelligence Company which is headquartered in Norway.
In one of its most recent releases, Rystad Energy said it did its own analysis of the Stabroek fiscal regime and benchmarked it against those of other “frontier” and upcoming oil and gas producing countries, such as Brazil, the United States (deepwater Gulf of Mexico), Mozambique, Israel, Tanzania, Mauritania, Suriname, and the Falkland Islands.
To measure the impact of the fiscal regimes in these countries, Rystad Energy said it ran its “economic model analysis” on the Liza Phase One project and compared the results against the fiscal regimes for the peer group countries.

Attorney-at-Law and Petroleum Academic Charles Ramson Jnr.

For Guyana, Rystad said it found that the average government take is 60 percent, which in Rystad’s benchmarking overview, places the country right between major producer Brazil at 63 percent and fledgling producers Mozambique and Mauritania, at 57 percent.
But several local and international observers have rubbished the analysis put forward by Rystad, while highlighting the fact that its economic model is not in the open so that it can be independently scrutinized for its soundness or lack thereof.
During an interview on Kaieteur Radio’s Programme, Guyana’s Oil and You, Global Witness Senior Campaigner for Oil, Gas, and Mining, Jonathan Gant, was keen to highlight that the economic model used by Rystad is not out in the open.
On the other hand, an analysis that it had commissioned Open Oil to do, shows that Guyana not only left US$55B on the table due to poor negotiations with ExxonMobil, but also leaves the State with a 52 percent take from the Stabroek Block.

Global Witness Senior Campaigner, Jonathan Gant

Gant said, “The reason why Open Oil gets contracted (by governments and agencies around the world) is because all it does is transparent. Anyone can go look at their model and play with it…and I am open to showing people how to use it.”
The Senior Campaigner noted that Rystad does not publish its economic model to justify how it arrived at certain fiscal conclusions.
Gant said, “Rystad does not publish their model and so we don’t get to open up the bonnet and figure out their math. Everyone can open up our bonnet. Please feel free to do so…”
Attorney-at-Law and Petroleum Academic, Charles Ramson, also agrees that the 60 percent take calculated by Rystad is questionable. He described it as “nonsensical.”
Ramson said, “How you can have a 50 percent split of the profit oil along with a two percent royalty and you end up with 60 percent total take? There is no other report of repute that suggested this, and in any event, it is nonsensical to even conceive.”
He further stated that Rystad is basically acting as mercenaries while noting that the assessment produced by Global Witness makes more sense.
“Their analysis is incorrect from a technical standpoint. The government is sharing it because they are hurriedly trying to accept anything.”
Like Ramson, Chartered Accountant, Christopher Ram told Kaieteur News that he has perused the model used by Open Oil and has found that their math is “robust”.
The transparency advocate said the same cannot be said of Rystad which has failed to make its economic model open for public scrutiny.

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