‘A disastrous year for Guyana’s oil sector’ - Patterson

‘A disastrous year for Guyana’s oil sector’ – Patterson

Jan 03, 2023 News

– 2022 closes with no trace of US$600M draw down from oil fund

– No audit reports on Exxon bills

– No full liability coverage for oil spills

– No independent regulators in place

– No scrutiny by parliamentary committees

– No audit of oil impacts on fishing industry

– No updated petroleum laws

Kaieteur News – The political opposition is of the firm conviction that 2022 saw nothing but disastrous oil sector governance from the People’s Progressive Party Civic (PPP/C) administration.

Specifically, Shadow Minister for the oil and gas industry, David Patterson said 2022 has come and gone without the government securing full liability coverage for oil spills from ExxonMobil Corporation, even though this is a requirement in the permits for its four sanctioned projects in the Stabroek Block. Patterson also lambasted the government’s silence on this front, saying that they ought to be forthcoming about the reasons for its failure thus far.

Opposition’s Shadow Minister for Oil and Gas, David Patterson

Patterson was also critical of the fact that audit report of ExxonMobil’s cost recovery bills have yet to be made public. The contract to audit Exxon’s costs totalling US$7.3B for the period 2018 to 2020 was awarded early last year. VHE Consulting, a registered partnership between Ramdihal & Haynes Inc, Eclisar Financial, and Vitality Accounting & Consultancy Inc were hired to do the job with support from two international firms— SGS and Martindale Consultants. The ‘Cost Recovery Audit and Validation of the Government of Guyana’s Profit Oil Share’ was awarded to the tune of US$751,000 with a four-month deadline. The auditors handed over their report, as Kaieteur News understands, in December 2022. President Dr. Irfaan Ali had promised to make the details of this audit public but there has been no update on this front to date.

Another key audit report that is yet to make its way into the public domain pertains to over US$460M in pre-contract costs Exxon and partners incurred from 1999 to 2016. This audit was undertaken by IHS Markit since 2019. Natural Resources Minister, Vickram Bharrat has not provided an update on when this report would be available for public scrutiny.

Patterson also slammed the government’s failure to release reports that were drafted by Alison Redford, a lawyer and former Canadian politician who had reviewed the Payara and Yellowtail Field Development Plans. Both reviews were done in an unprecedented fashion, less than 60 days. Given the level of due diligence required for such projects, each costing Guyana between US$9B and US$10B, industry stakeholders have said a year minimum, is needed for a thorough review. Stakeholders have said that proper reviews are necessary to ensure Guyana is not being shafted on project costs.

Further to the aforementioned Patterson said, “They also failed to produce any feasibility reports for the gas-to-energy project despite making promises to do so and even budgeting to do so. We don’t know how they arrived at costs which are now in excess of US$2B. Also frightening is that the Natural Resources Committee of Parliament has never met, thus preventing parliament from exercising proper oversight of the oil and gas sector.”

While the country may have a Local Content Law in place, Patterson said its many loopholes and zero regulations, also point to the government’s incompetence. He also said there is no proper oil spill recovery plan in place nor has one been tabled.

The Shadow Minister also lamented the absence of a Petroleum Commission being established to ensure independent management of the sector. He said the sector remains within the bosom of the President, Vice President and Natural Resources Minister, therefore exposing its governance and policies to significant political interference.

He also said citizens must be alarmed by the fact that they have no clue what government did specifically with the withdrawal of over US$600M from the Natural Resource Fund. He said the money was moved to the Consolidated Fund but no one, save and except for the government, knows how this money was used. He said this hinders the power of the people to hold government accountable.

The Opposition member also chided the government for failing to even commence an audit of the nation’s fishing stock in lieu of impacts from the booming offshore industry. Government had said last year that a study was done by the Food and Agriculture Organization on this very matter but never released the results.

In light of the foregoing points, along with the fact that the nation’s petroleum laws remain outdated, Patterson said 2022 for Guyana’s oil sector was the epitome of lawlessness.