The Alliance For Change (AFC) has cautioned the government against getting involved in the direct marketing of crude oil, saying it does not have the expertise, administrative infrastructure nor logistics to successfully undertake such an initiative.
“Furthermore, this move could also be interpreted as an affront to existing, legitimate marketing companies and open avenues for corruption,” the party’s General Secretary David Patterson told a press comnference yesterday.
Minister of Natural Resources Vickram Bharrat recently told Stabroek News that government is exploring cutting out the ‘middleman’ and directly selling its oil share, with India being a prospective buyer.
“That [selling to India] is something we will consider, too. But, of course, we would like it to be an open, transparent process. We have always mentioned it should be that way. We are considering the option of India but then we are looking at making it an open process,” the minister had said in an interview.
“What we are looking at, too, is not marketing but selling [ourselves]. In that way we save on the marketing fee. So if any country, India, or any company, is willing to do that, we may be open to talk about that. That way this country would actually save money,” he had added, while noting that government will assess the best option for this country.
But yesterday the AFC expressed concern over the prospect of the government directly marketing the country’s share of crude oil, bypassing existing established marketing mechanisms.
Patterson said such a move would not only signal a significantly frightening development, but raise questions about the policy direction, whether it has been well researched and the potential benefits quantified.
“Guyana, a new oil-producing country without the requisite industry experience, should seek partnerships to leverage our bargaining power. The PPP regime should not traverse beyond the usual bi-lateral agreement between nation-states, and all such resulting commercial contracts should be subject to parliamentary oversight and approval,” Patterson said.
He said the recent announcement raises doubts about the real intentions of the PPP/C government.
“It should not be viewed in isolation of the recent events, including rushing the Natural Resource Fund (NRF) legislation through the National Assembly, the diversion of the funds to finance Budget 2022 with no checks and balances, and the removal of the head of the GY-EITI, Dr Rudy Jadoopat, who has a stellar track record and international accreditation,” he added.
Former head of the Environmental Protection Agency (EPA), Dr Vincent Adams, who was fired by the PPP/C, also spoke on the issue and reiterated that the government does not have the competence or capabilities to directly sell the crude oil.
“Guyana does not have the capability for marketing. We have never done this before. It is a specialised area in the oil and gas industry,” he said, before adding that unless the government can show it has the expertise in marketing the oil it should not take that route.
Patterson added that he believes it is the government’s intention to sell the oil to specific individuals and in the process bypassing the international protocols.
He also pointed out that the issue should be looked at against the backdrop of the fact that the audit of ExxonMobil’s US$460 million in pre-contract costs remains incomplete because there is no local expertise.
Bharrat, in written responses laid in Parliament to questions from Patterson, had stated in December that the Irfaan Ali-led administration remains committed to seeing the audit process through. However, he indicated that the audit for 1999 to 2017 is still underway, while they are working diligently in the selection of the auditors for the 2018 to 2020 period.
According to Patterson, he is unsure of which middleman the government will cut out since somebody local has to market the oil.
“We are certain they already have a purchaser to purchase the crude and the cutting out of the middleman is just a smokescreen,” he added.
Also weighing in on the issue was AFC Leader Khemraj Ramjattan, who said that capacities and capabilities of the government create tremendous suspicion when it takes charge of such matters. “This can be detrimental and disadvantageous to the nation…,” he added.
