Is there more than meets the eye?

Aug 31, 2023 Editorial

Kaieteur News – Recent developments concerning the extension granted to oil companies for relinquishing portions of the Stabroek, Canje, and Kaieteur oil blocks have raised red flags, casting a shadow over the government’s commitment to openness and accountability. In the case of the Stabroek block, its operators have been handed until 2027 to comply with relinquishment requirements.

The less-than-transparent approach adopted by the administration, regarding the stipulated review of the extension of the period of exploration, should concern every Guyanese. No amount of obfuscation by the Vice President will dismiss the concerns over the extension granted for the period in which ExxonMobil and its partners are required to relinquish specified portions of the Stabroek block.

Under the Production Sharing Agreement for the Stabroek Block, ExxonMobil and its partners should have surrendered one-fifth of its total blocks. But as was reported, they were granted a one-year extension because of a force majeure: the effects of the COVID-19 pandemic.

However, this one-year extension was conditional and subject to quarterly reviews, the first being in September 2020, one month after the PPP/C took office. These reviews were designed to assess whether the force majeure event had a legitimate impact on the oil companies’ operations, thereby justifying the extension.

The quarterly reviews were instituted to prevent the exploitation of loopholes and to guarantee that extensions are only granted under genuine, unavoidable circumstances. As such, if the conditions that justified the granting of the extension changed, then the force majeure could no longer justify an extension of the period of exploration.

Vice President Jagdeo and his sidekicks have been keen to point out that the extension was granted under the APNU+AFC government. However, they have failed to highlight the requirement for quarterly reviews which would have allowed for a determination as to whether the force majeure impacted the operations of the oil companies. The government needs to come clean on whether it conducted any such review, the outcome of the review and to make its findings public.

Transparency is the essence of accountability. As such, the vital importance of the government ensuring greater transparency in its decisions in the oil and gas sector cannot be overstated.

The Production Sharing Agreement (PSA) for the Stabroek Block explicitly outlines the timeline for relinquishing a portion of oil blocks. ExxonMobil and its partners were obligated to surrender one-fifth of their total blocks by a specified date – an arrangement designed to ensure a fair distribution of resources and prevent undue concentration of power.

The first of these reviews was scheduled for September 2020, one month after the PPPC took office. It is perplexing that despite the government’s commitment to transparency, there has been a conspicuous failure to make public the details of this review.

The public is entitled to know whether these reviews were conducted, the process involved, the findings, and how these findings influenced the government’s decision to not discontinue the extension.

The lack of specifics about the reviews of the oil blocks’ extension leaves room for speculation and undermines the government’s credibility. It also raises red flags about the management of the oil and gas sector.

Further, the reliance on a force majeure as the reason for the extension warrants scrutiny. Force majeure events are typically unforeseeable and unavoidable circumstances that could not have been mitigated through reasonable measures. Such measures were put in place to allow the oil companies to continue operations. The oil companies had continued operations during the pandemic.

The lack of transparency and the selective disclosure of information by the government fuels suspicions of ulterior motives. Is there more to this extension than meets the eye? Are there hidden agreements or considerations that the public is unaware of? Without the government’s willingness to address these concerns, such questions will continue to circulate, deepening the sense of unease.

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Is there more than meets the eye?

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