US diplomat warns of propensity for corruption in oil and gas

Chargé d’Affaires at the US Embassy, Bryan Hunt warned yesterday of the propensity for corruption in the oil and gas sector within emerging economies.

He was speaking at the Planning and Oversight Deepwater Training under the Energy Governance and Capacity Initiative (EGCI) held at the Guyana Marriott Hotel yesterday.

Hunt spoke to members of the Environmental Protection Agency and the Guyana Geology and Mines Commission who were in attendance and said that “Developing natural resources such as oil and gas have tremendous benefits to countries, but it carries with it tremendous risk.

The unique technical and economic factors associated with natural resource extractions make this sector particularly prone to corruption and mismanagement”. He added that poor sector governance and a resulting lack of economic development can engender corruption, mismanagement and conflict, creating a cycle of underdevelopment from which it can be difficult to escape.

He continued that “It is important therefore for countries who are entering into the oil and gas production business to put systems in place to avoid these problems before profits start and money begins to flow.’

Hunt congratulated Guyana on taking proactive steps toward the development of the sector. Noting that the relevant US departments were willing to continue support through workshops and other initiatives.

He stated that the US had to modify its systems within the EGCI since the Deepwater Horizon oil spill of 2010 in the Gulf of Mexico which resulted in the deaths of 11 people.

Meanwhile, Minister of Natural Resources, Robert Persaud cautioned that Guyana was still in the beginning stages of sectoral development and that Guyana was yet to move into the retail of oil and gas on a commercial basis.

“We are still in the exploration stage so we have to temper expectations as we know we have Exxon currently carrying out drilling and they are well on schedule and all of us have our fingers crossed that in a few weeks we will be able to have some good news, so I just want to ensure that the impression is not conveyed that the sector is here. We are preparing for the sector,” he cautioned.

Persaud in the same breath said “I wish to reemphasise that the US has been very consistent and an important ally in ensuring Guyana mobilises the investment but also that we undertake the efforts to develop our natural resources even in the face of some unjustified and unwarranted attempts by some external forces who seek to push back our efforts in developing first, exploring but also developing our natural resources both offshore as well as onshore.”

The Venezuelan Government has over decades repeatedly objected to the exploration for oil in local waters.

Most recently on April 7, 2015, Venezuelan Foreign Minister Delcy Rodríguez said in a letter to ExxonMobil’s Country Manager Jeff Simon, “…your communication and actions openly contradict the due respect towards Public International Law and the Bolivarian Republic of Venezuela, clearly showing your intention to subvert it, since privately and unilaterally you intend to perform unauthorised operations in a vast offshore space adjacent to our energy reserves in the so-called Stabroek block, which the Bolivarian Republic of Venezuela has not recognized, now or in the past.”

Additionally, on October 10, 2013, Venezuelan naval forces seized the MV Teknik Perdana, a seismic exploration ship indirectly contracted to US oil company Anadarko Petroleum Corporation Inc to explore the company’s Roraima Block offshore Guyana with a view to determining whether commercial   quantities of hydrocarbon existed there.

Guyana has been adamant that the ship was intercepted in this country’s 200-mile Exclusive Economic Zone. The 36-man multinational crew on the Malaysian-owned (Sapura-Kencana Petroleum) and the Panamanian registered oil survey vessel included scientists from the Texas-based researcher TDI-Brooks International.

Persaud added yesterday that “in Guyana we have started a very elaborate and comprehensive process of preparing for an oil and gas economy … from the onset I want to commend the US government and the staff here for their abiding support over the years in facilitating workshops and interactions such as this in building our capacity as we prepare for an oil and gas economy in all aspect in terms of how do we manage revenue how do we ensure transparency and also how do we look at safety and technology and even very crucially how do we reach out for investments.”

He noted that Guyana was already in the preliminary stages of making arrangements with the Extractive Industries Transparency Initiative (EITI) based in Norway that overlooks the transparency standard of countries’ oil, gas and mineral resources. Persaud said that initial reports by British experts are underway for preparation for submission to the EITI.

Frisco McDonald, the Embassy’s Economic and Political Officer told members of the media that the training was focused mainly on the technical aspects but the larger picture was to allow for the transition from oil and gas exploration to discovery to the creation of revenue while not squandering resources.