As government prepares to meet today with prospective buyers of Guyana’s first three cargoes of crude from ExxonMobil’s Liza-1 field offshore Guyana, attorney Sanjeev Datadin says he will be filing court action to block any agreements made during those discussions.
“Legal proceedings are being contemplated to set it aside; that is, to set aside any contract [from being made]. We can’t stop anybody from meeting but they can’t conclude arrangements if they have no authority,” Datadin told Stabroek News yesterday.
“As soon as tomorrow [today], those documents will be filed in the local courts,” he said, adding that they will also ask government to explain how it arrived at inviting only some buyers and what process was used in procuring advice on same. Datadin said that he will be filing the court action on behalf of a concerned citizen but declined to name his client.
The Department of Energy (DoE) yesterday issued a statement explaining the decisions surrounding the impending sale. Among other things, the DoE said that it is an interim arrangement that covers Guyana’s first three cargoes of oil only and Crude Marketing Specialist, Virginia Markouizou of the United Kingdom-based RPS Group, has advised that it would be best to give a few high quality international oil companies with a global refining footprint and integrated oil value chains an opportunity to support the DoE during this incubation and launching phase.
Last Friday, Bloomberg reported that oil traders from Houston, Geneva and London, numbering about half a dozen, are expected to begin bidding today on some of Guyana’s first oil cargoes.
The report said that government last week sent a letter to refiners around the globe inviting them to bid for three million barrels of Liza Blend crude, the light-sweet oil it will start exporting next year. “The catch is that the buyer must take the unusual role of handling ‘all operating and back office responsibilities’ related to exporting the crude,” the Bloomberg report said, citing a document it has seen.
“On top of that, the bids must be offered “face to face” — in the country’s capital of Georgetown — starting Monday. Such a voyage is rare for traders, who do most of their business on instant-message platforms and by phone,” it added.
Datadin yesterday told Stabroek News that for the caretaker APNU+AFC government to want to form deals now and lock down potential buyers is absurd. “It appears that what the government wants to do is sell crude. The government is going to say that since it is a sale only, they could avoid the Procurement Act because they are not buying or paying for anything, but they would have acted on advice from oil consultants hired. Those consultants should have been hired only using the legal procurement process,” he said.
“Aside from that, what they are going to do? They are going to meet these people to sell the crude and then rely on their advice on how to further market the crude? This is just a taster and incubation process so that they could put things in place? That act would be a service that they are obtaining and should fall under the Procurement Act. The more important question and what has to be answered is who identified these people and why did they handpick people and not had public advertisement. Why didn’t they outline in a public advertisement on what they were looking for? It just lacks transparency,” he added.
The attorney said that in the interest of transparency and accountability, Guyanese should know about the steps government is taking to sell their resources and should know that they are involved in the process.
“There is a presumption that the population is entitled to a legitimate expectation that the government would not arbitrarily dispose of the crude resources and would get the best possible deal…we have the [Extractive Industries Transparency Initiative] and other agencies that can offer assistance in what goes on but transparency must mean that everybody must clearly know what is the process and everybody must receive a fair opportunity in participating in the process,” Datadin said.
“Nobody knows how long it was going on and what considerations were going into it. Can you imagine it had to take an article from Bloomberg on Friday for the nation to be informed,” he added. Letter writer Robin Singh in yesterday’s Sunday Stabroek said that Leader of the Opposition Bharrat Jagdeo had informed the media of the planned oil sale at his weekly press conference last Thursday. The government had not made any prior announcement.
Datadin said the APNU+AFC administration should also be more cognisant of the ruling of the Caribbean Court of Justice which said that it is a caretaker government and act accordingly. “What legal underpinning or authority do they have to engage in this process? Who would have met and does this mean that the members of the Cabinet would have authorised this? This is not a function the Department of Energy can exercise on its own. This has to be a function of government and it must explain how this particular transaction has been authorised,” he asserted.
He blasted government for its sloth in preparing for oil production saying that it had four years since the first discovery and for a government to not understand and know the process for selling its share of crude is an embarrassment.
“It is obvious that this government does not know what quality of crude they have or how to market crude. These are things they should first determine before speaking to buyers. On what basis would the buyers provide this information and how do we rely on the [information] they give us? We don’t have oversight over anything and we don’t know. They had a lot of time. They had five times the sufficient time they needed to prepare. What it is now is that they have taken steps and nobody is quite sure what steps they have taken. They can say anything in response,” he charged.
“That seems disingenuous to me. If you are selling, there is the world market price to compare so what is the complication? If your complaint is you don’t know what quality you have, then exactly what price will you conclude? Are you going to agree to a moving scale price? How do you do that? These are just a few examples of the massive lapses in judgement and massive lapses in leadership. This shows the failure to put a structure in place, legislation in place and all the necessary agencies [and] polices. Everybody was asking which way would the actions of the government be; that is to follow Norway or Nigeria. This would tend to indicate that it is a massive step in the wrong direction,” he said.
