Exxon pressured, duped Granger Govt. into signing lopsided deal – Damning UK report reveals

Nov 22, 2023 News

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….Ram questions Trotman’s omission of this document in latest book

Kaieteur News – In his recent book, “From Destiny to Prosperity” former Natural Resources, Raphael Trotman made several revelations about the circumstances that led to the signing of the lopsided Stabroek Block Production Sharing Agreement (PSA) in 2016.

Trotman revealed, for example, that he did not act alone in signing the highly criticised deal; he acted on instructions from the David Granger-led Cabinet. Trotman even said he was hesitant to sign the contract, which did not go down well with ExxonMobil’s top brass at the time. He also expressed support for the renegotiation of what is considered by some, the worst deal in Guyana’s history.

However, despite these admissions, Chartered Accountant, Christopher Ram said Trotman’s book does not mention a probe he had commissioned on the lopsided deal during his time as minister. Ram, in a recent column published by the Stabroek News deemed the absence of any reference to the report done by American law firm Clyde and Co, as “the greatest avoidance of truth” by Trotman. Ram said that the Report reveals that it was Exxon’s representatives that wrote a document for Trotman to take to Cabinet seeking approval for the egregious Stabroek Block PSA.

“If the PPP/C truly wanted to see how the 2016 Agreement came about, or wanted to embarrass the members of the Opposition, then the Clyde and Co report is the way to do it,” Ram said in his column. The January 2020 Clyde and Co Report states that the British law firm was hired to conduct an independent investigation into the circumstances leading to the execution of the Stabroek Block PSA with ExxonMobil Guyana, Hess Guyana Exploration Limited and CNOOC Petroleum Guyana Limited.

The report states: “The Contractor Consortium appears to have put a lot of pressure on the Government and the Ministry of Natural Resources to secure the 2016 Agreement in a short time scale…It seems to us likely that EEPGL (now known as ExxonMobil Guyana) was also strongly driving to have a new agreement signed prior to the Liza-2 well results becoming fully known and understood by the Government. Presumably because knowledge of a ‘world class’ discovery could have altered the government’s negotiating position.”

As a recap, Exxon and its partners had announced its first discovery of oil in the Stabroek Block in May 2015. This was at the Liza 1 well. The Liza-2 well was intended to help the consortium understand the volume of oil that was available for production in commercial quantities. On February 5, 2016, drilling of Liza-2 commenced in order to further evaluate the Liza-1 well.

But before revealing the true size of the Liza-2 well which found enough oil to be a standalone project, Exxon and partners rushed the previous government to close the deal with generous terms. These included a two percent royalty and a tax-free ride.

Clyde and Co said it was provided with and analyzed, drafts of the 2016 Agreement exchanged between the ministry and Exxon.

The law firm’s report states, “From this analysis, it is clear that the negotiations of the detailed terms of the 2016 Agreement were limited and took place over the period of roughly one month. The Government could have taken a different approach and tried to have extensive negotiations on the terms of the 2016 Agreement, principally to improve the fiscal terms. However, such an approach was not in the forefront of the Government’s mind.”

Another significant point in the report is that Trotman along with Legal Advisor at the time, Mrs. Joanna Simmons Homer confirmed during their interviews that Exxon was keen to finalise and sign all relevant agreements as quickly as practically possible. “They both mentioned during the course of our interviews that they would receive almost daily phone calls from the Contractor Consortium’s representatives enquiring about the progress in negotiations,” the report stated.

The report further notes that on June 21, 2016, a meeting was held in Guyana, between former President David Granger and government officials, along with  Exxon’s former Vice President, Stephen Greenlee and others, to discuss the terms of the new petroleum agreement. On June 27, 2016, the Government and the Contractor Consortium signed the agreement. Three days later, Exxon announced that it had made a massive discovery at the Liza-2 well. The Clyde and Co report said it was clear that Exxon was pushing for a new agreement prior to its announcement as it feared the “world-class” discovery would have changed the dynamics of the negotiations.

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• Chartered Accountant, Christopher Ram, David Granger, former Natural Resources, Raphael Trotman

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