Four years later…Guyanese yet to see oil sales contract – Transparency body

Apr 10, 2023 News

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Kaieteur News – Since Guyana commenced oil production in 2019, successive governments have failed to publish the oil sales agreement, outlining the value of each barrel of crude oil.

While Guyanese are privy to the monthly revenue flow from the petroleum sector, the country does not know how much each barrel of oil is being sold for on the international market, even though this is a requirement of the Extractive Industries Transparency Initiative (EITI).

Highlighting this recently was President of the Transparency Institute Guyana Inc (TIGI), Frederick Collins. In a recent interview with this publication, Collins said that the country’s leaders have been masquerading as the epitome of transparency, but the nation still does not know simple details such as the cost its oil is being sold at.

“Transparency in prices- what price are we getting for what we sell our oil for? It is not as clear, you can go on the right websites on the Brazilian market and you can see the price every single day so nobody can say (or) theorize that well they are not getting all the price that you are selling it for. It is the public domain…we are seeing a lot of antics and so on but if we were to compare with what obtains just next door with Brazil we would realize that we are so far away,” the TIGI head argued.

The International Secretariat for the Extractive Industries Transparency Initiative had called on Guyana to make the contracts public for the country’s share of profit oil.

In November 2022, the Government of Guyana (GoG) awarded a one year contract to BP International Limited, a subsidiary of British Petroleum, to market Guyana’s share of profit oil from the Liza Destiny and Liza Unity Floating, Production, Storage and Offloading (FPSO) vessels. The firm beat 13 others during the tendering process to win the contract. BP and one other Chinese firm had submitted bids to market the country’s oil at no expense to the government.

As the successful candidate, BP International will be responsible for providing all functions of marketing, assessing regional and global demand centres, selecting customers and making appropriate transportation arrangements, providing support and guidance to the client in all operating and back-office responsibilities of managing these crude sales. It will also be expected to facilitate timely and cost efficient crude oil operations; and support the client in the continued introduction of the grade to multiple geographies and refinery systems.

In addition to the foregoing, the Ministry of Natural Resources said BP will also be required to provide benchmark performance comparisons of prices paid for the client’s crude while working closely with the client in understanding the behaviour and yields of the Liza blend and how these affect pricing differentials.

After pressure was mounted by the Opposition for the contract to BP to be made public, the Natural Resources Ministry released an unsigned contract for the sale of the country’s oil in December.

The unsigned document states that the Service Provider “shall not accept for their own benefit any trade commission, discount, or similar payment in connection with activities pursuant to the performance of this Contract or to the Services or in the discharge of their obligations under the Contract, and the Service Provider shall use their best efforts to ensure that the Service Provider’s Personnel, any Sub-contractor, and agents of either of them similarly shall not receive any such additional remuneration.”

Further to that, the document which has since been removed from the Minsitry’s website stated, “The Service Provider has an obligation and shall ensure that its Service Provider’s Personnel and Sub-contractors shall have an obligation to disclose any situation of actual or potential conflict that impacts their capacity to serve the best interest of the Client, or that may reasonably be perceived as having this effect. Failure to disclose said situations may lead to the disqualification of the Consultant or the termination of its Contract.”

Kaieteur News previously reported that Aramco Trading Limited (ATL), the London-based trading subsidiary for the State controlled Saudi Aramco, had inked a one year contract with the Ministry to market Guyana’s crude entitlement from the Liza Phase One Project. That contract came to an end in October 2022 and was never released for public scrutiny.

According to the EITI Standards of 2019, as it regards contracts “Implementing countries are required to disclose any contracts and licenses that are granted, entered into or amended from 1 January 2021. Implementing countries are encouraged to publicly disclose any contracts and licenses that provide the terms attached to the exploitation of oil, gas and minerals.”

It goes on to point out that countries must also provide: “An overview of which contracts and licenses are publicly available. Implementing countries should provide a list of all active contracts and licenses, indicating which are publicly available and which are not. For all published contracts and licenses, it should include a reference or link to the location where the contract or license is published. If a contract or license is not published, the legal or practical barriers should be documented and explained.”

Guyana is among more than 50 countries that have committed to strengthening transparency and accountability of their extractive sector management by implementing the EITI Standard. The country signed on to this pact on October 25, 2017.

 

 

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• Contract, Market, oil, sale, Transparency

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