How ex-President Ramotar & Robert Persaud ‘enriched friends’ with Guyana’s Canje Oil Block

Jan 04, 2022 News

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“Many investors, including a little-known Canadian company, see huge profit potential in Guyana’s offshore oil deposits. But many critics say this poor South American country is selling out its natural bounty and getting little in return.”

By Chris Arsenault

Kaieteur News – Cruising through Guyana’s capital in a black Toyota Land Cruiser, licence plate PSS1, former president Donald Ramotar said he believes he helped transform the only English-speaking country in South America through deals to extract billions of barrels of crude oil.

Ramotar governed from 2011 until 2015, and in that time signed contracts with giants like ExxonMobil and Total, as well as smaller companies including Canada-based JHI Associates and the Guyanese firm Mid-Atlantic Oil and Gas.
Sporting a simple white beard and faded blue jeans, Ramotar is an affable old-school socialist who lambastes growing inequality and corporate giants — including ExxonMobil. But reflecting on his presidency, when exploration work kicked into gear, Ramotar said it was “a rewarding period.”
The results continue to pay off, he said, as his SUV rolled past cows chewing grass on the side of cracked streets in Georgetown, on the way to an emerging coastal business district of shiny new five-star hotels.
Despite coronavirus lockdowns, Guyana’s economy grew 43.5 percent last year, one of the fastest rates in the world, as an estimated 10 billion barrels of offshore crude started gushing cash.
If all current discoveries are extracted, the government of Guyana is expected to receive around $130 billion US over the next 20 years in oil revenue, said Schreiner Parker, head of Latin America research for Rystad Energy, a consultancy. For a country of fewer than 800,000 residents, where nearly half the population lives on less than $6 US per day, the results could be breathtaking — but only if the new wealth is managed properly.
To some analysts, the signs so far haven’t been encouraging.
“I am not sure we are capable of handling that large [financial] windfall,” said Thomas Singh, an economist at the University of Guyana. “It’s difficult to say this bonanza will transform us into a developed country.”
Amid the heady hunt for black gold, JHI Associates, a newly registered Canadian company with no drilling equipment or local office, managed to acquire nearly 20 percent of the Canje oil block, which is located 180 kilometres offshore. According to Guyanese corporate filings obtained by CBC News, JHI Associates Inc. was registered in Guyana on May 4, 2015 — just one week before the election in which Ramotar’s government was voted out of office.
JHI’s listed address when it was granted the concession: a home in Barrie, Ont.
“I didn’t know that was the case,” said Ramotar, when asked why he signed an oil deal with a company registered to the founder’s house. Ramotar insisted all proper procedures were followed in awarding the contract, and that the final decision was made by government technical experts, not himself or other politicians.

But according to Clive Thomas, the former head of Guyana’s government-backed anti-corruption body, the State Assets Recovery Agency (SARA), “these are highly irregular things.” Thomas had been tasked with investigating the Canje deal — until his organization was disbanded and he was fired last year.
When asked about the firm’s role in the Canje oil field, JHI declined to comment. “We’re a low-key company; we would appreciate it if you didn’t mention us at all,” said spokesperson Scott Young.
Based on two dozen interviews and hundreds of pages of corporate registry filings from Canada and Guyana, this is the story of how an unknown company managed to get in on the biggest oil boom in the Western Hemisphere. According to former government officials and transparency campaigners, JHI and the Canje field are also representative of what can happen when a poor country strikes oil — and why climate-changing crude might not improve life for many average Guyanese in the long term.
II. The oil boom
Guyana’s Foreign Secretary Robert Persaud, who served as natural resources minister when the Canje deal was signed, echoed Ramotar’s assurance that all the right procedures were followed in assigning the 4,800-square-kilometre concession.
Persaud said the initial agreement for Mid-Atlantic Oil and Gas, JHI’s Guyanese partner on the deal, was first approved in 2013. But it was put on hold because of a territorial dispute with Venezuela.
To supporters, the men who won the Canje concession were savvy, long-time energy industry stalwarts who paid their dues and maintained hope in the country’s potential when others shied away.
“We were known as a high-risk exploration site. We were considered high-risk from a geological standpoint,” said Edris Kamal Dookie, founder and CEO of Mid-Atlantic Oil and Gas, of his early attempts to secure investment in Guyana’s offshore fields.

Persaud, Ramotar and several independent analysts criticized SARA for engaging in political witch-hunts in the name of transparency and being ineffective in investigating corruption.
“The SARA investigation was vindictive and, in my view, anti-national,” said Dookie, whose firm controls 12.5 percent of the Canje field. He believes SARA unfairly targeted JHI and Guyanese entrepreneurs like himself.
Dookie said his company never received any formal correspondence from SARA to say they were being investigated; he said he just read in the media that the probe was happening. In June 2019, JHI and Mid-Atlantic issued a joint statement saying they hadn’t received requests for information from investigators related to the Canje block and denied any wrongdoing.
Thomas disputes this, saying his organization had written to the companies under investigation. “These companies [JHI and Mid-Atlantic] had no experience, no nothing,” he said.
SARA had been doing good work, Thomas added, but was dissolved by the PPP government of President Irfaan Ali. Critics say the government shut down the probe because it feared what SARA would uncover.
“I personally felt the investigation would have ended up in court,” said Thomas.
Indeed, opposition lawmakers worry the country — which has close ties to Canada through a diaspora of about 200,000 — is priming itself for more graft and a classic oil curse.
“We have had oil contracts signed off to god-knows-who for god-knows-what,” said Deputy National Assembly Speaker Lenox Shuman, who leads Guyana’s third-place political party. “For all intents and purposes, it’s a banana republic.”
Ramotar said that during his time in office, his government was “attacked viciously over corruption. Most of it was not true.” But transparency advocates said the close relationship between Dookie and senior politicians, including Ramotar and Persaud, is cause for concern.
There was never an open tender where companies could apply for a piece of the Canje block based on their merits, and this contravenes Guyana’s petroleum laws, said Christopher Ram, an attorney in Georgetown and anti-corruption advocate.
“We ignored the legislation. We didn’t go out and advertise applications for blocks,” he said. “They were literally friends and persons with influence who approached the administration [about the Canje field] … Dookie has been playing around [with] politicians in Guyana for a very long time.”
During CBC’s interview with Ramotar in the sleek bar of Georgetown’s new Marriott hotel, Dookie was coincidentally sitting a few tables away, enjoying an afternoon drink with two women. Noticing this, the former president waved him over to chat.
“He’s a visionary,” Dookie said of Ramotar.
The ex-president returned the compliment. “I think he deserves a national award,” Ramotar said of the oil executive. Dookie spent his youth studying at McGill University in Montreal and working on the docks in the Maritimes, and has a reputation as a hard-partying playboy.
Wearing an unbuttoned collared shirt that exposed a gold chain, Dookie seemed to relish the description.
“I have no apologies to make,” he said over cappuccinos and cassava balls. “The same people who are criticizing me … I saw one at a strip club in Miami. I am not a member of the Rotary Club or the Georgetown Club. I relate to the common man.”
III. The Canadian connection
When it partnered with Dookie’s firm on the Canje block in 2015, JHI was registered to 37 Amelia St. in Barrie, Ont., a grey brick home with a two-car garage. The home belonged to John Cullen, a Canadian financier who was the company’s sole director at the time, according to Guyanese corporate records.

Cullen remains CEO and director of JHI, according to the firm’s website.
JHI’s most recent financial disclosures with Guyana’s government say the company has been inactive. According to filings in Guyana, it hasn’t brought on new directors or sold shares since its founding. Aside from Cullen, the only individuals mentioned in Guyanese registry documents are a lawyer and accountancy firm.
According to a review of its website, JHI’s only asset is its stake in the Canje block.
Foreign Secretary Persaud acknowledged that no oil has been found in that block yet. The concession holders, he said, have drilled three exploration wells that came up dry “at significant cost to the investors and zero cost to the government.”
Despite the dry holes in Canje, JHI has been making money internationally. The company reported a pre-tax profit of $43 million US in 2018. The privately held firm, which isn’t traded on stock markets, has been selling stakes to other investors. For example, Eco-Atlantic, another oil company active in Guyana, bought more than six percent of JHI in June. Westmount Energy Ltd., a U.K.-based investment firm, holds more than seven percent of JHI, after buying shares earlier this year.
In other words, the company itself doesn’t extract any oil or have the technical ability to do so, but it has still turned a piece of the Canje field into profit. JHI has even moved up from its former Barrie address — it now lists its office as being in a glass skyscraper in Toronto’s financial district.
Right now, Exxon is the main operator of the Canje block. It’s the one doing the heavy lifting when it comes to drilling wells. It controls 35 percent of the field after buying it in 2016. France’s Total holds another 35 percent. Exxon has requested permission from Guyanese environmental regulators to drill 12 new wells there in 2022.
“The bottom line is [JHI and Mid-Atlantic] got licences with no transparency,” said Guyana’s former auditor general Anand Goolsarran. The companies never actually did anything – Exxon operates the field, he said, and the Texas-based company now has near “total control” of the industry in Guyana.
Regardless of Exxon’s role, Goolsarran said, “No major contracts, especially involving natural resources belonging to citizens, ought to be awarded in the run-up to an election. This is wrong.”
Ramotar said he understands why people might see the timing of the Canje deal, one week before he was narrowly voted out of office in 2015, as suspicious. But he stressed that everything was done by the book.
“I really thought I was going to win that election.”
IV. A racial divide
Part of why the People’s Progressive Party (PPP) lost in 2015 — before winning power again five years later — stems from Guyana’s simmering racial divide.
Enslaved Africans were brought to the area by Dutch colonists in the 1600s to toil on sugarcane plantations. The British formally took control of the country from other European powers in the early 1800s and abolished slavery by 1834. To fill the ensuing labour shortage on plantations, indentured workers were brought in from the Indian subcontinent. Their descendants now make up more than 40 percent of Guyana’s population.
The PPP, which is in power today, draws its support primarily from the Indo-Guyanese community. The opposition People’s National Congress Reform (PNCR) is backed mostly by Black Guyanese.

Those tensions, and the need for more money in government coffers, are on sharp display in Buxton, a primarily Black settlement on the outskirts of Georgetown. Despite the national wealth promised by the discovery of oil, trash collection doesn’t exist here, so residents are forced to burn their garbage, leaving the acidic smell of charred plastic lingering in the humid evening air. Many houses lack running water. The village library has been closed permanently.
“Hell no, no benefits are coming to Buxton,” said Marcos Glenn, an unemployed 50-year-old, when asked how the discovery of oil has impacted the community. “Everything we get, we have to fight for it. Black people own nothing in Guyana. They aren’t creating jobs for nobody here.”
Levon Spencer, who is 26 and also looking for work, echoed those concerns. “They aren’t training nobody, they are bringing in people from out of the country to do the jobs,” he said of the oil companies.
While Spencer sat outside a makeshift convenience store, barefoot kids played soccer in a vacant lot nearby, as a little boy chased a herd of goats down a potholed road.
“They’ve got no basketball court, nothing for the kids to play with,” Spencer said. “They should be doing something for the young people.”
V. A question of royalties
As residents wait for major changes from the country’s oil wealth, the great expectations have raised questions about how much money Guyana is actually reaping from its crude.
It’s unclear how much money, if any, Guyana lost on the Canje contract. Mid-Atlantic and its backers have spent about $100 million US on their three dry wells, Dookie said. Their last unsuccessful drilling attempt happened this fall. He said the Canje concession acquired by Mid-Atlantic and JHI had been given up by Western oil majors prior to 2012.
“A lot of folks told me I shouldn’t take something the white man relinquished,” he joked.
Guyana’s current government defends its record on the Canje field; but it has tougher talk for ExxonMobil.
“In retrospect, things could have been different,” Foreign Secretary Persaud said of Guyana’s production contract with the oil giant. “Certainly, it may not be the best deal for the country.”
Under the contract, which has been released publicly following pressure, Guyana receives a two percent royalty rate on gross earnings and 50 percent of profits – after Exxon recovers the initial cost of its investment. That last bit is especially irksome to many Guyanese. Neighbouring Suriname, for example, has a royalty of more than six percent for most of its deals, and critics say even that is low compared to other jurisdictions.

Ramotar thinks two percent is far too little for a royalty rate. Exxon disputes this.
The government will be asking for more royalties and better terms in future contracts, Persaud said, but they can’t reopen the Exxon deal now without undermining investors’ confidence in the country.
Lawyer Christopher Ram said problems with the Exxon deal go far beyond royalty rates or profit-sharing. Guyana’s government, he said, hasn’t been completing its basic due diligence to audit Exxon’s books and payments, as the country is entitled to do under the agreement.
Exxon defends the deal it signed. The company declined to make a spokesperson available for an interview, but responded to questions via email.
“The terms of the contracts are competitive with other agreements signed in countries at a similar resource-development phase,” said ExxonMobil spokesperson Meghan Macdonald, citing an independent study from the oil research firm Wood Mackenzie.
“Our work and the support of the government of Guyana are the basis of a long-term mutually beneficial relationship that has created significant value for the people of Guyana,” Macdonald said.
The company has employed more than 2,860 Guyanese, she said, and it’s working with local oil services firms to build their capacity. “Developing the numerous world-class deepwater discoveries offshore Guyana remains an integral part of ExxonMobil’s long-term plans.”
Transparency campaigners say the Exxon deal is robbing Guyana of key money, especially from the lucrative Stabroek block. And the people who suffer most will be the working classes who need the revenue for better public services.
Taxi driver Sunil Prahalad, for example, needs a bone marrow transplant for his daughter, Chelsea. Guyana doesn’t have a specialist to do the procedure in its public hospitals, he said, and his family has been crushed by debt and sadness as she suffers.
“For an oil-producing country, we should be doing better,” he said. “I’m strapped with medical bills, and I haven’t seen any improvement.”
VI. Looking ahead
To opposition lawmakers, anger over the terms of Exxon’s contract and questions over the awarding of the Canje field speak to broader problems with how the sector is being managed.
“Guyana’s resources could be a bounty, where people themselves benefit — or we could be the Nigeria of South America,” said Shuman, the Deputy National Assembly Speaker, citing corruption, pollution and inequality in the West African nation. “It seems as though we are already suffering from the oil curse.”
Singh, the University of Guyana economist, sees the same writing on the wall. Oil wealth has led to a boom in construction, he said, and the country’s private sector is becoming more dependent on government contracts rather than manufacturing or innovation.
Rising prices and increased inequality are often symptoms of the oil curse, said Singh. He expects those trends to accelerate in Guyana. Prices are already running hot, especially in the capital.
“The cost of living has gone way up since we started producing oil,” said Mark Lee, a customer sitting with his feet resting in a pink container of soapy water at a makeshift beauty salon in one of Georgetown’s open-air markets. “We haven’t seen any benefits yet. None.”
For many Guyanese, the offshore oil boom can feel like something happening far away. Aside from the construction of large warehouses and other facilities near the capital, as well as new hotels and American Airlines flights packed with burly men wearing oil company jackets, there isn’t much evidence that some of the world’s fastest economic growth is taking place.
The roads still pool with water when it rains due to improper drainage. Couples walk hand in hand along Georgetown’s seaside looking at the ocean on weekends. Young men drink beer on plastic chairs at roadside stalls in the evenings. And it’s not uncommon to see a cow or chickens picking at scrubland on main thoroughfares in the capital.
Buttressed by walls and an internal canal system, most of Georgetown lies below sea level and flooding linked to climate change has become increasingly devastating in recent years.
As the oil boom intensifies, Singh expects some residents will have more money to spend on bigger houses, flashier cars and other consumer goods. But once the wells run dry, he worries Guyana’s non-oil economy will flatline, and building other industries won’t be possible.
“In 30 years, we will probably be the same as now,” said Singh.
Government officials like Persaud and businessmen like Dookie say that’s pessimistic thinking. The economy is already booming and through the creation of a sovereign wealth fund to invest oil profits in other sectors, Guyana should be able to secure its long-term future, Persaud said.
He expects these investments will keep bringing income to the country, even when oil demand peaks, likely in the next 15 years, due to more efficient renewable technologies and increasing climate change fears.
To Schreiner Parker, the energy consultant, Guyana is “the test case to see what the natural resource story of the 21st century is going to be.”
The history of the extraction of oil in the developing world in the last century has been “less than stellar,” he said, and he hopes things might be different this time around.
“There are more eyes on the situation and that creates more accountability, and accountability is how you make sure the population benefits, rather than the local corrupt politicians and extractive companies,” said Parker.
Campaigners say that transparency isn’t happening in Guyana today, as evidenced by the Canje deal and similar no-bid contracts for the Kaieteur block signed to companies that don’t have the capacity to actively extract anything. Government officials disagree, noting they have published the contracts for key oil fields for the public to see, along with other anti-graft initiatives.
Whatever happens next with Guyana’s oil boom in this, the climate change era, Persaud is already eyeing the next natural bounty as the cycle of extraction continues.
“We see oil and gas as a stimulant for other sectors, including the utilization of our freshwater resources,” Persaud said.
“As water resources are dried up elsewhere, we have it in abundance here. We would want to capitalize on that opportunity.”
(This story was produced in partnership with the Pulitzer Center on Crisis Reporting and published by CBC News — Canada’s publicly owned news and information service – Founded in 1941.)

 

 

 

 

 

 

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