Guyanese yet to see agreements on US$1.8B oil sales

Jan 15, 2023 News

Kaieteur News – According to Bank of Guyana, the oil producing nation has earned US$1.8B in revenues from the sale of its share of oil in the Stabroek Block. This revenue would have been received since the inception of oil production in 2019 to now. What is yet to be disclosed however, are the sales agreements to support these earnings. These documents continue to remain shrouded in secrecy despite Guyana’s membership with the Extractive Industries Transparency Initiative (EITI).

According to the International Secretariat for the Extractive Industries Transparency Initiative (EITI), Guyana is yet to declare consistently, information pertaining to the volumes of oil collected in accordance with the profit-sharing split, alongside the identity of the buyer for each oil cargo. Furthermore, EITI said Guyana does not appear to have yet made progress on publishing descriptions of the process for selecting the buying companies, the technical and financial criteria used to make the selection, the list of selected buying companies, any material deviations from the applicable legal and regulatory framework governing the selection of buying companies, and the related sales agreements.

Expounding further, EITI said there has been a de facto cessation of awards of new licences in the oil and gas sector since 2017, which was effective during the period under review (2018). In spite of this, Guyana has not used its EITI reporting to disclose transfers of participating interests in oil and gas blocks, of which at least one took place in the Orinduik Block in October 2018. EITI said it remains unclear, from publicly accessible documents, whether any technical and financial criteria are assessed in either oil and gas license awards or transfers.

It said, “Government officials explained that rigorous checks of licence applicants were performed (even if the criteria against which these checks were performed were not made public) but that these could be waived in the instance of well-known international oil companies (IOCs), as are the majority of the oil companies currently operating in Guyana.”

The international watchdog has since urged authorities to make the necessary efforts to come into full compliance with Requirement 4.2 of its Standards.

EITI REQUIREMENTS

EITI’s Requirement 4.2 speaks to sale of the State’s share of production or other revenues collected in kind. It states, “Where the sale of the State’s share of production of oil, gas and/or mineral resources or other revenues collected in kind is material, the government, including state-owned enterprises, are required to disclose the volumes received and sold by the State (or third parties appointed by the State to sell on their behalf), the revenues received from the sale, and the revenues transferred to the State from the proceeds of oil, gas and minerals sold. Where applicable, this should include payments (in cash or in kind) related to swap agreements and resource-backed loans.”

The published data must be disaggregated by individual buying company and to levels commensurate with the reporting of other payments and revenue streams (4.7). Multi-stakeholder groups, in consultation with buying companies, are expected to consider whether disclosures should be broken down by individual sale, type of product and price. The disclosures could include ownership of the product sold and the nature of the contract (e.g. spot or term).

Companies buying oil, gas and/or mineral resources from the state, including State-owned enterprises (or third parties appointed by the state to sell on their behalf), are also encouraged to disclose volumes received from the State or State-owned enterprise and payments made for the purchase of oil, gas and/or mineral resources. This could include payments (in cash or in kind) related to swap agreements and resource-backed loans.

Kaieteur News understands that the published data could be disaggregated by individual seller, contract or sale. The disclosures could for each sale include information on the nature of the contract (e.g. spot or term) and load port. Also, where there are concerns related to data reliability and where practically feasible, the multi-stakeholder group should consider further efforts to address any gaps, inconsistencies and irregularities in the information disclosed.

Bank of Guyana, Extractive Industries Transparency Initiative (EITI)., Guyana, Orinduik Block, Stabroek Block

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