Out of the blue, on February 27th this year, the government announced that a Department of Energy (DoE) within the Ministry of the Presidency would be established to take over responsibility for the oil and gas sector from the Ministry of Natural Resources (MNR).
This had been completely unexpected and various explanations were given by government officials in response to the view that there had been diminished confidence in MNR and the portfolio was being taken away from the minister. Indeed, in the months leading to the announcement of the DoE, the government and MNR had come under withering attack for secretly renegotiating in 2016 the Production Sharing Agreement (PSA) with ExxonMobil’s subsidiary, Esso Exploration and Production Guyana Limited (EEPGL) to the detriment of the country. That renegotiated PSA allowed broadened exploration time for Exxon in return for a paltry 2% royalty to the country when a huge oil deposit had already been found and there was a great likelihood that other large wells would be uncovered as was later the case.
The PSA also included a shackling stability clause which had been developed under the PPP/C government and was recklessly negligent on matters such as Exxon’s responsibility for any environmental damage and how Guyana could recover costs in such a scenario. The government and MNR were also severely embarrassed by the revelation in this newspaper that there had been a signing bonus which was hidden away from the country and which was the real reason why the PSA had not been released to the public but kept secret under the trumped up claim of national security concerns. The PSA was only released at the end of December, 2017.
In the backdrop of all of this, it was clear that the government needed to reboot its approach to the oil and gas sector and improve its credibility. It had been derelict in its decision to renegotiate the PSA and even though it had a long lead-in time following the discovery of oil in May, 2015 it had not set out determinedly to secure the country’s interests by hiring experts and setting out suitable policies and a rigorous regulatory framework. It is in this milieu that expectations rose that the government would use the establishment of the DoE to significantly recalibrate its stance on the nascent oil and gas sector and upgrade Guyana’s team with skilled negotiators for hard-nosed encounters with companies like ExxonMobil and Total etc.
The appointment of an environmental economist, Dr Mark Bynoe to head the DoE falls far short of the public’s expectation and the government’s own commitment on the way forward in securing the country’s oil and gas interests. In his field of study, Dr Bynoe appears to have impeccable credentials and is well-published. There has also been positive feedback on his professional engagements here. However, he has no oil and gas experience and insofar as there is urgent need for a tough as nails negotiator to face down behemoths like ExxonMobil and to hammer out deals for other oil blocks, he doesn’t fit the bill. President Granger is already scrambling to do damage control by suggesting that Dr Bynoe would source the skills to help him along the trail. That was clearly not what was intended. The person at the apex of the DoE was to be someone who had broad experience in oil and gas negotiations and who would if it was required mobilise the ancillary support needed.
Indeed, on April 11th this year, President Granger himself said that given the lack of petroleum experts here there would be a global search for the best qualified candidates.
“We are conducting talks and we have a road map. We have to identify personnel, we have to identify buildings, we have to … start advertising to attach quality personnel that can lead this important department into the future. We are being very careful,” Mr Granger told reporters at State House. There is, however, no evidence that the President and his government engaged in any real search to fill the key position of the Head of the DoE.
The President had added on April 11th “It is going to be a challenge because this is an international industry, we are aiming at a world class industry so we have to get the best. As you know, Guyana has no experience in the field and we have a small petroleum unit which is now in the Ministry of Natural Resources and we obviously have to attract the best people from around the world. So we are not attempting to avoid that responsibility, so have to be careful”.
The government’s commitment to find the best oil and gas talent was also adverted to by the President’s former petroleum adviser, Dr Jan Mangal who told Stabroek News last week that the requirements for the person to head an integral institution such as the DoE were laid out in a plan that had been compiled during his tenure and which was discussed as recently as March of this year. That plan included that the vacancy be advertised globally in a bid to get the best person.
“The head of the new Department of Energy, per the plan from March, was to be someone with international gravitas, someone who could challenge the likes of (former US Secretary of State and former Head of ExxonMobil) Rex Tillerson, for example, who was comfortable talking [oil and gas] with Ministers from the major producing countries and the top executives from the major oil companies”, Dr Mangal said.
The President has clearly gone back on his commitment for a global search and it raises the question of how exactly Dr Bynoe was decided upon as even the government ministers who have been involved in the sector’s development were caught unawares, according to well-placed sources.
Minister of Natural Resources Raphael Trotman was placed at the head of a Task Force, which comprised the Finance, State, Public Infrastructure and Business ministers, to formulate a proposal for the development of the mandate of the DoE as well as how it would be structured and staffed. Did Minister Trotman submit such a report?
If Dr Bynoe was not chosen via a transparent process intended to find the best possible candidate for the DoE then there is a greater risk of political interference in the very important tasks that he will be entrusted with and this will weaken his authority from the outset and strengthen the hand of ruthless players like ExxonMobil.
Having seriously bungled the renegotiation of the EEPGL PSA in 2016 and not taking urgent steps in the last three years to meet the stark human resource deficiencies in grappling with the oil and gas sector, the government gave itself another chance of righting the ship via the DoE. Its selection of Dr Bynoe – possibly handpicked by the President – further deepens the oil and gas quagmire in which the country finds itself.