An award-winning international transparency watchdog has called for investigations into the role of a Government Minister during negotiations with oil giant ExxonMobil, as part of an explosive new report into Guyana’s controversial 2016 oil deal.
The report, titled “Signed away” was written by Global Witness, a UK-based Non-Governmental Organisation with a long track record of exposing corruption and human rights abuses. Among its recommendations was for Guyana’s Government to investigate the role played by Natural Resources Minister Raphael Trotman in brokering the deal.
The report expressed concern over the lacklustre negotiations on Guyana’s behalf and blames the Minister for not representing Guyana’s interests.
Negotiated badly
The report states that Trotman arrived at Exxon’s headquarters in Texas in April 2016, whereupon he was put up first class in a nearby hotel and dined at an exclusive restaurant – all on ExxonMobil’s tab.
The company, according to Global Witness, had given Guyana 10 weeks to sign a new draft licence. The watchdog stated that there is evidence that Guyana’s team negotiated badly on the country’s behalf. When it comes to Trotman himself, the report noted that he did not spend much time negotiating at all.
The entire process, from when negotiations began in early April, concluded with a signed deal on June 27. According to Global Witness, they were able to confirm that at least three Guyanese officials; Trotman, GGMC Commissioner Newell Dennison and another GGMC staffer, Christopher Lynch, were part of the negotiations, although it admitted more could have been involved.
“For its part, Exxon had a large team involved in the negotiations, which included Oswald and then-Country Manager Jeff Simons,” the report states. “Despite Exxon’s demands earlier in the month, Trotman – responsible for signing Guyana’s oil licences – did not appear to spend his time in Texas negotiating.
“According to a memo summarising his trip, the Minister instead toured Exxon’s new glass and steel offices. He and his colleagues were most impressed by the company’s facilities for keeping Guyana’s oil find samples: What was most striking was the very strong smell of oil that filled the room,” the report states.
This is despite coming up against a rigorous ExxonMobil team of negotiators. Global Witness noted that while Guyanese officials did seek an improved royalty, the oil giant was not very receptive to any substantial changes to the fiscal terms it got in the 1999 licence.
Missed opportunity
In addition, the report states Trotman was supposed to have had new information on the Stabroek Block that ought to have strengthened his hand during negotiations. Instead, this card was not played.
“Trotman failed to capitalise on Guyana’s strong bargaining position. During negotiations, he knew that the company was analysing a new possible oil find. Trotman even thought the company would announce its results on a specific day: June 28 2016,” the report stated.
“But the Minister did not wait for these results, which would have allowed Guyana to assess Stabroek’s true value and which turned out to be one of the world’s largest recent finds. Instead, on June 27, Trotman signed Exxon’s licence.”
Referencing a report allegedly prepared by the Guyana Geology and Mines Commission (GGMC) after the negotiations, Global Witness claimed that GGMC officials had at the time thought it unrealistic to press Exxon for a better deal.
According to Global Witness, part of the report stated: “I have the view that there may be a fair chance to model some notional improved royalty to kick in, but I also speculate that in the environment of deep water, deep target development, the price of oil would have to go up significantly [to achieve that].”
In fact, Global Witness claims that Guyana presented feeble terms to Exxon and that expert advice that more financial information was needed was ignored by Guyana’s team. The report notes that Exxon’s decision to start negotiations on home ground may have also been a tactical decision, to give it an edge.
Moreover, the report says that the Guyanese delegation was told Exxon would cease development of the oil field unless its terms were met. According to the report, not only were the negotiations rushed, but the representatives from the GGMC were out of their depth, experience-wise.
“The GGMC’s expertise is artisanal and medium-scale mining, not negotiations worth billions with one of the world’s largest oil companies. According to a 2016 report commissioned by UNDP, the GGMC “has only a very few technical personnel trained in oil and gas, with limited experience,” Global Witness also said.
Efforts to contact Minister Trotman for a response to the report’s findings were unsuccessful. Government, particularly Foreign Secretary Carl Greenidge, has already denied the claims made in the report.
Since the signing of the new deal, Trotman and the Government at large has been under criticism from experts and civil society alike over the deal, which guarantees Guyana a 50 per cent stake in production and a two per cent royalty.
Even the Government’s own advisor on petroleum at the time, Dr Jan Mangal, had criticised Guyana’s two per cent royalty on earnings from oil sales, which he said is low compared to global standards. Mangal’s contract was subsequently not renewed by the Government.
In 2018, President David Granger eventually transferred responsibility for oil from Trotman to the Ministry of the Presidency. A Department of Energy was created, with Dr Mark Bynoe as its Head. Oil production started officially last year December, with Guyana expected to have its first share of the oil in the coming weeks.
