JHI Associates Inc. (JHI) and Mid Atlantic Oil & Gas Inc. (MOGI), which were awarded the exploration licence for the Canje Block, offshore Guyana, yesterday said the process was proper, while noting that there were no oil discoveries prior.
The companies’ declaration comes in wake of the recently announced investigation being conducted by the State Assets Recovery Agency (SARA).
“Neither JHI nor MOGI has received any request for information, and neither company has been notified of any pending investigations into the award of the licence for the Canje Block. Both companies welcome the opportunity to discuss this matter with duly authorised agencies of the Government of Guyana at any time,” the companies said in a joint statement.
The companies broke their silence just shy of a week after this newspaper reported that SARA began investigating the issuance of about 20 oil exploration licences a year ago.
This newspaper had previously reported that in the run up to the May 11th, 2015 general and regional elections, in which the PPP/C was voted out after over two decades in power, then President Donald Ramotar had signed a contract with JHI for the Canje Block. Mid-Atlantic Oil & Gas Inc and ExxonMobil, which is Block Operator, also have participating interests in the Canje Block. In February of last year, French oil major Total announced that it had bought a 35% working interest in the Canje Block, in an agreement it signed with both JHI and MOGI. The two companies, it said, will retain a shared 30% interest alongside operator ExxonMobil.
In its press release, the companies provided a timeline of events that led to the issuance of the Canje licence.
According to the companies, negotiations for the Canje Block began in March 2013 and the licence was awarded on March 4th, 2015. The Liza 1 well drilled by ExxonMobil affiliate, Esso Exploration and Production Guyana Ltd. began drilling on March 5th, 2015 and announced a “significant discovery” on May 20th, 2015. The companies pointed out that over 40 wells had been drilled offshore in the Guyana-Suriname Basin prior to Liza-1, and none encountered commercial quantities of oil or gas.
This newspaper has seen documents which shows that JHI was only registered here on May 4th, 2015, while Mid-Atlantic was incorporated here on April 8th, 2013.
The joint statement said that as a statement of record, the block was awarded on March 4th, 2015, using the standard Guyana Model Production Agreement. The Liza 1 well on the adjacent Starbroek Block was very high risk and did not begin drilling until after the Canje Block licence was signed, it added.
“JHI and MOGI followed all applicable laws and regulations in their application for the licence for the Canje Block,” it said, while noting that both companies value their reputations as good corporate citizens and are committed to operating all aspects of their businesses in an open, cooperative and transparent manner. It was pointed out that both JHI and MOGI recognise the importance of this resource to the people of Guyana and take their responsibility to explore for oil and gas offshore Guyana very seriously.
It was stated that the founders of JHI, John Cullen, and MOGI, Dr. Edris K. Dookie, each have over 20 years’ experience exploring for oil offshore Guyana as the original co-founders of CGX Energy. Through CGX, they both served Guyana exceptionally, through the drilling of several offshore wells, and especially in relation to the pivotal role they played in the successful resolution of the maritime boundary dispute with Suriname, the statement added.
Further, the statement said that for the Canje Block licence application, Cullen and Dookie brought a technical team with over 130 years of offshore petroleum exploration experience, and significant financial capabilities based on prior successes in raising hundreds of millions of US dollars for oil and gas exploration projects in Guyana and elsewhere. The statement added that JHI’s and MOGI’s qualifications certainly met the Guyana Government’s requirement that licence applicants must demonstrate technical expertise and financial capabilities.
SARA’s Director Professor Clive Thomas, in speaking about the investigation, had told Sunday Stabroek that some of the companies may not be deserving of the licences they have.
“We have a lot of players [and] what is causing the concern is that some of the players don’t have any capital or skills in the area for which they have licences so that raises a red flag. Why did they get these licences?” he asked. Thomas did not name any company and had explained that the agency is currently collecting data and has not started speaking directly to companies which were awarded licences. He expects that once evidence of wrongdoing is found, civil recovery proceedings could be filed in the courts before year end.
The companies that have blocks in the deep water area, offshore Guyana, are: Repsol and Tullow Oil (the Kanuku Block); Tullow (the Orinduik Block); Anadarko (the Roraima Block); Ratio Oil (the Kaieteur Block); ExxonMobil, CNOOC Nexen and Hess (the Stabroek Block); ExxonMobil, Mid Atlantic and JHI (the Canje Block); CGX (the Demerara and Corentyne blocks); ON Energy; and Nabi. All were granted contracts during the PPP/C’s time in office.
Ramotar, who held ministerial responsibility for petroleum, told had told this newspaper that the then Minister of Natural Resources Robert Persaud had made a case for JHI and MOGI. He explained that JHI never went into negotiations as a company but was brought in by Mid-Atlantic and it was the latter company that was the principal in all the transactions. He said that Mid Atlantic’s approach was sometime before May, 2015, but noted that he had to ascertain from the records when exactly.
Former Commissioner of the Guyana Geology and Mines Commission (GGMC) Rickford Vieira, who led the agency which dealt with petroleum matters at the time, had told this newspaper earlier this year that he never met with oil and gas companies and was not part of any negotiations. He explained that Persaud led that cause and got technical assistance from the GGMC through now acting Commissioner Newell Dennison, who was then responsible for petroleum at the agency.
