Despite doing no work, Guyana owes Canje owner $100M in pre-contract costs

Oct 20, 2020 News

Former President, Donald Ramotar

Kaieteur News – With the advent of Guyana’s oil and gas industry, the dream the country’s leaders have attempted to sell to their countrymen is that these deals will bring them prosperity. However, in the case of the Canje block agreement, before Guyana could even see the fruits of the execution of the work programme set out in the contract, the country was placed in debt.
The people of Guyana owe Canje owner, Mid-Atlantic Oil and Gas Inc. US$500,000 (GY$100M) in “pre-contract” costs.
Former President and Minister of Petroleum, Donald Ramotar agreed to this when he signed the March 4, 2015 contract, handing the block to the infant company. The company’s sole shareholder is Dr. Edris Kamal Dookie.
Pre-contract costs are not defined in the contract, so no one knows what the $100M payment is for.
The agreement only states that the sum is in respect of all costs incurred by the contractor prior to the effective date.
A similar clause is in ExxonMobil’s 2016 Stabroek block agreement, but pre-contract costs are defined in the Stabroek contract. In that case, they include exploration and other costs from ExxonMobil’s operations prior to 2016 under its 1999 Stabroek block agreement.
However, unlike the Stabroek arrangement, Canje owner, Mid-Atlantic did no work prior to receiving the block in 2015. It hasn’t even done any work up to now, since it received the block. All it has done in the past five years is sell out interests in the block to several other companies. The company has sold stakes to JHI Associates, ExxonMobil and Total SE.
Kaieteur News first shed light on the issue of the undefined Canje block pre-contract costs in June, 2019. More than a year later, Ramotar has not explained why he agreed to indebt Guyana to a company which has done no work.
The provision is one of several red flags identified by this newspaper which anti-corruption advocates say warrant investigation. The block was given out two years after it was applied for, weeks before the 2015 general and regional elections which saw Ramotar unseated by the David Granger-led Coalition.

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