Anti-corruption watchdog group Global Witness has recommended that more effort be put into the State Assets Recovery Agency (SARA) investigation of the awarding of the licences for the offshore Kaieteur and Canje oil blocks, saying that key participants, including former Minister of Natural Resources Robert Persaud, have not been questioned about the process.
The recommendation that government “redouble the efforts” is contained in the group’s recently released report, titled ‘Signed Away: How Exxon’s exploitative deal deprived Guyana of up to US$55 billion,’ in which it noted that the awards raised “red flags.”
“In particular, the government should ensure that the investigation faces no obstacles in obtaining all the evidence it requires. And if the investigation does uncover evidence of wrongdoing, those involved should be held accountable,” it adds.
Stabroek News reached out to Head of SARA Professor Clive Thomas for comment to no avail as several calls to both his office and landline went unanswered.
In September of last year, Thomas told this newspaper that the agency had interviewed several “major players” and should it uncover any malfeasance, it will push for the recovery of the blocks and have them auctioned.
The agency had launched its investigations into the awards, which were triggered by specific information from several “whistleblowers.” Concerns about the deals relate to whether there had been advance knowledge of ExxonMobil’s major find, the first of which was made shortly before the 2015 elections, and whether that information had been used to tie up new deals.
Stabroek News had previously reported that days before 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 and Associates (Guyana) Inc. for the Canje Block offshore Guyana. Mid-Atlantic Oil & Gas Inc. and ExxonMobil, which is Block Operator, also have participating interests in the Canje Block. In February of 2018, 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 Mid-Atlantic Oil & Gas Inc. The two companies, it said, would retain a shared 30% interest alongside operator ExxonMobil.
Ramotar has told this newspaper that then Minister of Natural Resources Persaud had made a case for JHI and Mid-Atlantic Oil and Gas Inc.
And while it did not state what could be possible findings, Global Wit-ness said that government needs to put more time and resources into completing the investigation.
The organisation notes that within months of signing the 2016 Production Sharing Agreement with the government, ExxonMobil bought shares in both the Canje and Kaieteur blocks.
And while Global Witness said that it found no evidence of any illegality in those deals it calls into question what due diligence Exxon did to make sure that the process used to award the companies the licences were above board.
According to JHI, the report said, it stated that after it obtained its Canje share the company bought seismic data for the block.
However, less than a year after Canje was awarded and before JHI did further work, 35 percent of the licence was sold to Exxon. Global Witness said that no information is available about how much Exxon paid for this share.
Global Witness had written to Mid-Atlantic, JHI and their principals, Edris Dookie, and John Cullen, respectively, regarding their histories in the oil sector and how they obtained the Canje licence. “In coordinated responses, Mid-Atlantic, JHI, and Cullen responded that the companies “operated transparently and followed all applicable laws and regulations” when obtaining their shares in Canje” the report said.
The Kaieteur licence was initially awarded to two companies, each receiving 50% of the oil block, called Ratio Guyana and Ratio Energy, the latter which at the time was owned by an Israeli-based lawyer named Richard Roberts. On February 9th, 2017, Ratio Energy was sold to a Canadian company named Cataleya, which is run by two miners: Canadian Mike Cawood and Guyanese Ryan Pereira.
Involvement
Global Witness pointed out that it was not Pereira’s first involvement in the Kaieteur licence as in April 2015, he served as the Guyanese representative for Ratio Energy when it received the block.
“Neither Cawood nor Pereira appear to have much experience of drilling for oil. However, Pereira is a successful gold miner with the company Golden Eruption and has operations that would have been regulated by Robert Persaud as Natural Resources Minister,” the report says.
“For 50% shares in the Kaieteur Block ExxonMobil paid US$455,000 to Ratio Guyana. According to Ratio Petroleum, Exxon also paid US$350,000 to the other Kaieteur license holder, which Ratio Petroleum called its “local partner.” Because the other Kaieteur Company was now Cataleya, Global Witness believes it is likely Exxon’s payment went to Cataleya – which again, is controlled by Cawood and Pereira. It is notable, however, that Cataleya had acquired its Kaieteur interest only three weeks before Exxon’s money was paid,” the Global Witness report states.
The Exxon-Ratio deal had been in the works since July 2016, according to the report, just after Exxon had finalised the Stabroek deal. Noted was that according to Ratio Petroleum’s website, no seismic work was done in Kaieteur before Exxon bought its share.
Global Witness said that Persaud claimed ignorance of knowledge of the owners of the blocks, as he defended recommending that they be given their licences saying that the Guyana Geology and Mines Commission (GGMC) recommended them.
And while he said that he did not keep copies of any of the documents from those deals when he left office, all the information, according to Persaud, could still be accessed by the current government through GGMC records.
Global Witness said that the process through which the companies acquired the blocks should have raised “red flags” that a company of Exxon’s magnitude would check in detail before entering agreements.
“The Kaieteur and Canje awards exhibit multiple “red flags” that a company like Exxon would need to review before buying shares in the licenses,” the report states.
Persaud and the companies dismissed claims of wrongdoing, while Exxon rubbished the United Kingdom-based corruption watchdog organization’s assertions.
“In response, Exxon stated “we consider the accusations unfounded and baseless. ExxonMobil is committed to the highest standards of business conduct, and we follow all local laws and regulations wherever we operate,” the Global Witness report says.
And Cataleya and Cawood, according to the report, stated the company’s acquisition of Kaieteur and assignment to Exxon were “carried out in a manner fully compliant with all the laws of Guyana,” while Pereira did not respond.
“Answering a separate Global Witness request for comment, Roberts stated that he was a registered Ratio Energy shareholder, but otherwise the “assumptions contained” in our letter were “unfounded.” He also stated that his law firm ensures that its clients “comply with all the relevant rules and regulations which apply to their activities.” For their part, Ratio Petroleum and Ratio Guyana asserted that “Ratio group has been active in the [Exploration and Production (“E&P”)] industry for 3 decades and holds E&P assets in five different countries around the globe (in Asia, Europe and South America).” They also stated that “Three of Ratio’s entities are traded on the Tel Aviv Stock Exchange with a total market cap exceeding USD 1 Billion. Ratio maintains excellent reputation and corporate ethics. Ratio uncompromisingly ensures that its operations are fully compliant with the laws and regulations of the jurisdictions in which it operates,” the report adds.
