Guyana would be dancing with resource curse devil if it ignores consequences of secrecy in oil sector – Ram

Sep 26, 2021 News

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By Kiana Wilburg

Kaieteur News – In light of the copious amount of data, which show secrecy and opacity in the global oil sector that have resulted in some of the most shocking cases of corruption, Chartered Accountant and Lawyer, Christopher Ram, says Guyana would be foolhardy to think it would not suffer similar consequences if it is not transparent in its dealings with the industry.
Ram provided this comment during an interview with Kaieteur News on the absence of key information by the Irfaan Ali-led administration. To date, Ali nor his Vice President, Bharrat Jagdeo, have ordered the release of ExxonMobil’s local content or production reports. These have remained hidden from public scrutiny despite calls by local and regional actors.
When asked for his perspective on the importance of having these documents in the open, Ram was keen to note that accurate, timely and relevant information is not only good for proper decision making but also to meaningful and informed debate and discussion involving the public at large.

The Chartered Accountant said the unavailability of such information is as critical an area as the hugely significant petroleum sector, is not only a negation of the principles fundamental to good and responsible government but can also have grave intended and unintended consequences for the country. “We must be acutely aware that the segments of the petroleum world characterised by opacity and secrecy are also associated with some of the most egregious cases of corruption and mismanagement. To ignore these possibilities in our developing petroleum sector would be like dancing with the Resource Curse devil,” expressed the lawyer.
Speaking to the press statements ExxonMobil releases during the year on its local content spending and initiatives, Ram was keen to note that he finds it to be meaningless information if it is not verified via public scrutiny. He said too that it serves as a useful distraction from the oil giant’s violation, with support of the Petroleum Minister, of the law’s actual requirement on local content.
The Chartered Accountant said, “…The law and the 2016 Petroleum Agreement require the timely submission of a plethora of reports by the oil companies to the Minister. Arguably, some of these like the value of production and pricing statements of Crude Oil and Natural Gas can be considered of a confidential nature and protected by law.” Be that as it may, the lawyer categorically stated that others can actually benefit from public sharing, such as the monthly and quarterly production statements and quarterly cost recovery statements.
It was only last week Sunday that Kaieteur News highlighted the extent of the Irfaan Ali administration’s transparency deficit in the oil sector.
It was noted for example that a few weeks ago, ExxonMobil disclosed that it submitted its local content report for the first half of 2021 to the Ministry of Natural Resources. This very report is yet to be released for public perusal.
Also hidden from public scrutiny are the results of the audit for the US$460M Exxon said was spent pre-2015 in search of oil as well as the US$1B in expenses racked up on the development of the Liza Phase One operations. The report that was done on the Payara Field Development plan by controversial Canadian politician, Alison Redford, also remains hidden from the public eye.
Below is a list of other key tasks in the oil sector which auger well for transparency but have not been completed by the Ali administration.
1) Completion of a Local Content Policy.
2) Putting in place appropriate and independent technology offshore to monitor the measurement of oil remotely.
3) Outlining of benchmarks for Corporate Social Responsibility.
4) Establishing a Depletion Policy in consultation with the citizenry.
5) Establishing a Decommissioning Policy.
6) Outlining a structure for what is to be expected in Field Development Plans.
7) Strengthening key auditing agencies, specifically the Office of the Auditor General.
8) Strengthening institutions that will be responsible for the expenditure of the oil money-including the Ministry of Finance, the Ministry of Public Infrastructure and the Ministry of Health.
9) Improving Guyana’s capacity to monitor and record emissions offshore, particularly in the case of the Environmental Protection Agency.
10) Providing resources to the EPA so that it can make unannounced visits to the FPSOs while following safety standards.
11) Hiring technical experts needed within the Ministries of Natural Resources, EPA, the Guyana Geology and Mines Commission (GGMC), the Guyana Revenue Authority (GRA), etc.
12) Reviewing massive tax concessions/tax holidays. Example: provisions in oil contracts that allow tax exemptions on capital gains tax, personal income tax and withholding tax.
13) Updating policies/laws/regulations regarding direct and indirect transfers of interests in offshore blocks.
14) Establishing a Petroleum Commission.
15) Implementing software solutions for compliance monitoring and for operating requisite controls for expenditure of oil money.
16) Updating laws and regulations to address issues of ring fencing, transfer pricing (and other financial loopholes/issues), health and safety of workers, monitoring of the environment (regarding issues such as flaring and stiffer penalties for such infractions), pre-qualification criteria for oil blocks, etc.
17) Strengthening and increase systems for reporting on decisions in the oil and gas industry.
18) Publishing of Oil Sale Agreements.

 

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