29 companies submit proposals to market Guyana’s oil -14 tainted, 8 are newer applicants

Oct 02, 2020 News

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By Mikaila Prince

Kaieteur News – With hopes of securing the contract to market Guyana’s crude for the next 12 months, 29 companies and commodity traders have submitted their Requests For Proposals (RFF) to the Department of Energy (DoE).

This, and details of the companies, were revealed on Wednesday by the Ministry of Natural Resources, during the historic signing of the Payara license.
Notably, this is not the first time that Guyanese are reading about this contract, as the former government under the Coalition regime had opened bids for the same in April of this year.

In the first bidding process, 34 companies had submitted proposals- 15 of which were linked to widespread, global corruption and fraud. This was highlighted by Kaieteur News in a series of articles.Notwithstanding this and despite not having the power to enter into international contracts, the coalition had shortlisted 19 out of the 34 companies—15 of which were discovered to have had a chequered history.

However, when the PPP/C assumed government in August, Vice President Bharrat Jagdeo had taken the decision to scrap the contract and retender it.
Jagdeo had said this was executed because the new government wanted to give a fair advantage to those companies who acted “decently”, but did not want to submit bids to an illegal government.

Eight newer companies submit proposals
According to the list of 29 companies which have submitted bids, eight of them are newer applications.

These include the National Gas Company of Trinidad and Tobago; Pacific Energy Incorporated (USA); Dinhor Investment Limited (China); Gemcorp Commodities Trading SA (Switzerland); Anza Investment Group (UAE); Suncor Energy (USA); SacOil Energy Equity Resources Limited (Seychelles, East Africa); and ExxonMobil’s partner in the Stabroek Block, Hess Corporation.

Investigations by Kaieteur News show that little data can be found on two traders — Pacific Energy Inc., and Dinhor Investment Limited — as no websites could be found on them.

Another trader, Gemcorp Commodities Trading SA, was established in 2014 and began its investment activities in October that year. Their website states nothing about the company serving as an oil trader. This is concerning, however, considering that one of the mandatory requirements stipulates that applicants must have at least five years’ experience in crude oil marketing and trading, within the last five years, as a company.

What was found?
Public documents show for example that four of the world’s largest commodities trading firms – Trafigura, Vitol SA, Glencore PLC and Mercuria Energy Group have used intermediaries to funnel over US$31 million in bribes to corrupt Petrobras employees, so that they may win big contracts along with acquiring other benefits. Investigations by the Brazilian government have resulted in convictions and fines that have ensnared senior executives of these companies, while others are still under investigation
Another applicant is China Offshore Oil International Pte Ltd. In 2015, this state-owned Chinese company had their former Deputy General Manager, Wu Zhenfang, under criminal investigation for accepting an undisclosed amount in bribes although it is unclear what the outcome of the case was. Another Chinese company, Sinochem, saw Du Keping, the former Vice President sentenced last December to 11 ½ years in prison for accepting USD $1.8M in bribes.
Russian energy company, Lukoil Oil Company & Litasco, is currently being criminally investigated by Geneva’s top prosecutor on suspicion of corruption of foreign officials and money-laundering.
Gunvor Group, one of the world’s top energy traders was found criminally liable for corruption in the Republic of Congo and the Ivory Coast, after failing to avert its employees and agents from bribing public officials. The trader was subsequently ordered to pay almost USD $94 million to the Swiss Attorney General (AG) in October of last year. According to Reuters, the settlement includes a fine of 4M Swiss francs, out of a maximum of 5M, as well as gross profit plus interest it gained from oil deals in the two West African countries from 2009 to 2011, worth hundreds of millions of dollars.
Equinor, formerly known as Statoil, a Norwegian company, was in 2018 fined ROK $20M for misconduct and extensive corruption in Iran in 2002/2003 attempting to secure lucrative oil contracts for the company in that country.
The Director for International Operations, Richard John Hubbard was also ordered to pay NOK 200,000 in fines for his involvement in the case. This was mainly achieved by hiring the services of Horton Investments, an Iranian consultancy firm owned by Mehdi Hashemi Rafsanjani, son of former Iranian President Hashemi Rafsanjani. Horton Investments was paid US$15.2 million by Statoil to influence important political figures in Iran to grant oil contracts to Statoil.
French oil major, Totsa Total Oil Trading SA, was found guilty of corruption in the United Nations’ oil-for-food programme for Iraq during Saddam Hussein’s rule. In 2016 the Parisian Court of Appeal found the company guilty of corrupting foreign officials and was fined USD $820,863.
According to the Commodity Future Trading Commission (CFTC), an independent government agency in the U.S, British Petroleum Products agreed to pay a total of $303M in sanctions to settle charges of manipulation and attempted manipulation in the propane market in 2003 and 2004. Adding to the list of infringements, a BBC World Report exposed how BP agreed to pay billions for Petro-Tim, a West African oil company owned by Romanian businessman, Frank Timis.
This West African corporation was found to be in the centre of corruption in Senegal. Documents showed that BP knew about the suspicious payments, which totaled to millions to the Senegalese President’s brother, Aliou Sall, and it went ahead with the deal anyway.
In 2015 Jiang Jiemin, the former chairman of PetroChina, International Brazil Trading Limited, was sentenced to 16 years in prison for taking bribes and abuse of power. A report stated that authorities also confiscated about 1 million Yuan ($157,600) from Jiang, after he failed to explain where it came from. Later in 2017, the Chinese court found Liao Yongyuan, the former vice chairman, guilty of corruption and sentenced him to 16 years imprisonment.
According to Reuters, Liao had abused his various positions in the energy industry between 1997 and 2014 for personal gain, and between 2003 and 2015 took 13.4 million Yuan ($1.95 million) in bribes, and was unable to account for the origin of 21 million Yuan in assets.
Notably, the National Procurement and Tender Administration Board (NPTAB), which is responsible for selecting the companies, has mandated that applicants must disclose whether they have engaged with an act or fraud or corruption, or whether they are being investigated for the same.
NPTAB can also choose to terminate any proposal for the contract, and/or suspend the crude oil marketing operations and associated services if it is determined at any stage if it finds that the agent is engaged in corruption and/or fraud.

 

 

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