Keeping information from the public only results in distrust and contracts for all of the country’s natural resources should be published, says Government’s Petroleum Advisor Jan Mangal.
“The signing bonus and all revenues should be disclosed. There are no pros for non-disclosure, only cons,” Mangal told Stabroek News in response to questions posed on the emerging oil and gas sector and the controversy over the US$18m payment from ExxonMobil which had been kept secret by the government.
“Evidence from around the world is overwhelming that secrecy never benefits the people,” he further noted.
The United States-based advisor to the David Granger-led APNU+AFC government has said before that he told government to release the ExxonMobil contract and that the same should be done for all contracts for natural resources.
Mangal informed that he was not employed by government last year when the 1999 contract with ExxonMobil subsidiary EEPGL was tweaked and new terms incorporated, which included the signing bonus and has always advised on full disclosure.
“One of the top items in my terms of reference for the role of Petroleum Adviser was transparency (full disclosure of contracts, and thereby all terms such as signing bonuses). I recommended to the Government that the whole contract be disclosed. I submitted presentations on this specific topic to the Quintet (of government ministers), i.e. advocating for full disclosure. I did not explicitly identify each term in the contract, such as a signing bonus, as I indicated the whole contract should be disclosed,” he stated.
He was asked about the impact of the non-disclosure of the bonus on Guyana’s membership of the Extractive Industries Transparency Initiative (EITI).
“Guyana is not yet required by the EITI to publish contracts, since this requirement kicks in at a later stage of the EITI process. However irrespective of EITI or any requirements, the Government should be publishing all contracts for all of Guyana’s natural resources. This should have happened under previous administrations but did not, and will hopefully happen under this administration,” he added.
But he also pointed out that Guyana is in the process of learning and the Govern-ment is getting advice from different experts in different fields, border issues and oil and gas, all of whom have valid reasons for their advice.
He believes that this placed Govern-ment in a difficult position where the oil and gas advisor was saying release the contract but the border legal team was probably saying it was not the wisest of decisions. Nonetheless he is relieved that the Government announced it will publish the whole contract this month and believes that there was nothing sinister in the plan to not disclose the contract.
‘Benefits the people’
The Petroleum Advisor said that that President Granger has a clear vision for how the revenue from the oil and gas (O&G) sector is to be used and that is, it must be used to transform Guyana positively.
“The President’s instruction to me was to focus on ensuring the O&G industry benefits the people of Guyana over the long term, especially future generations,” he pointed out.
Mangal explained that his role as government advisor did not start until March of this year but he was asked by a government official, who he did not name, in June of last year to comment on some proposed new contract terms for the Stabroek Block. He said that the Ministry of Natural Resources (MNR) indicated to him that there may have been an opportunity for the government to renegotiate and it was why they were asking for the proposed new terms.
He said he gave his advice pro bono and replied through the same email correspondence, in June 2016, but never heard back from MNR on the issue. “Only in 2017 did I learn there was in fact a renegotiation in 2016,” he said.
And while Mangal formed part of the President’s ‘Quintet plus One’ petroleum negotiating team, he was never formally notified that a signing bonus was paid. Instead, he said that he was told, “By word of mouth”, and he “believed those who told me”.
“I was not told the exact amount that was paid, but was told it was between USD 10 to 20 million,” he said in reply to the Stabroek News questions.
He said that he understands and believes that there was a genuine debate within government on when to disclose the contract.
President Granger is expected to give the go ahead for the release of the contract this week.
Granger has also said that the decision to have the monies placed in an escrow account at the Bank of Guyana was based on advice and belief that should an emergency national security issue come up it would be easily and readily accessed.
Minister of Natural Resources Raphael Trotman has said that government has already secured the services of two international law firms: the Norwegian firm Michelet & Co and US law firm, Jones Day. Michelet & Co specialises in the oil & gas, oilfield and maritime services industries.
He did not say if the money from the US$18M would be used to pay the two firms.
‘Divergent approaches’
Mangal was asked about the amount received in the context that several persons have deemed the sum paltry saying Guyana could have gotten more than US$18M.
He responded, “Different experts and different countries have divergent approaches to signing bonuses, and this is understandable…The signing bonus is only but one term amongst many terms in an O&G contract. The value of the signing bonus is not critical, whether it be USD 0, 15 or 50 million. The recent issue with the signing bonus is purely the issue of timely disclosure to the public, or lack of.”
Further, he added, “Signing bonuses around the world range from zero to over a billion USD. Guyana should not focus on the value of the signing bonus but instead should focus on the value of the total revenue Guyana could get over the full life of the project, which is a combination of all the major terms in the contract such as royalty, profit share, tax, signing bonus, etc. Guyana needs to maximise its total take over the life of the project, and to do this Guyana needs numerous O&G experts working in the Government on a long term basis.”
And on how he feels the bonus controversy leaves Guyana in the eyes of big investors and transparency advocates, Mangal said that he doubts that it will have any long term damage on this country’s reputation.
“I doubt there has been any long term damage to Guyana’s reputation. Studies show that investors value the stability which comes with a country having simple transparent processes, fair decision making, redress, and where there is trust in the system of Government,” he said.
“Guyana is not yet in this position but is taking steps in this direction. This is not a journey which the Government can achieve on its own. It is critical that all sections of civil society become informed about the challenges ahead, develop realistic expectations, and be proactive with public discourse,” he added.
