On September 21st, Vice President Bharrat Jagdeo reported that President Irfaan Ali had ordered that an investigation be swiftly conducted to determine who authorised personnel at the Ministry of Natural Resources to bypass advice from the Guyana Revenue Authority (GRA) and enter into direct negotiations with ExxonMobil to reduce US$214 million in questionable cost oil claims flagged by IHS Markit to US$3 million.
“I spoke with President Ali and I agree that there should be a full investigation of this matter and the Minister (of Natural Resources) still has to give a full report to the cabinet on what took place,” Mr Jagdeo told a press conference.
Eleven days later, there has been no sign of an urgent investigation and President Ali has not been heard on this matter although on Saturday he spoke about the challenging electricity generation situation.
The delay in addressing this shocking attempt to reduce profits due to this country at the very least gives the varied conspirators time and opportunity to concoct their exculpatory tales and destroy evidence. At worst – and this is what President Ali should be most concerned about – it radiates the view that the government cannot be trusted with the country’s oil revenues and that there is more than a whiff of corruption in the air. The longer President Ali takes to act, the more entrenched this view becomes.
No matter how this scandal is sized up, somebody has to take the fall. Somewhere in the Ministry of Natural Resources and possibly higher up culpability has to be established and heads must roll. Who boldly initiated talks to deflate the disputed costs, to the extent that Mr Jagdeo took the figures as gospel and the local ExxonMobil head Mr Routledge presented them to the opposition, must be unmasked.
An unauthorised attempt to boil down US$214m in disputed cost oil expenses to US$3m has to attract consequences particularly since it impinges on profits due to the country and the fact that we are just at the beginning of what could be a long relationship with ExxonMobil, a company whose track record in relation to weak jurisdictions like Guyana is very troubling.
This probe could be over in a day or two and ExxonMobil would be expected to co-operate fully. The findings of the probe will then allow more careful examination of ExxonMobil’s conduct and what the country needs to do to corral excessive expenditure claims and insulate agencies like the Ministry of Natural Resources from any corrupting influences.
Where is the Petroleum Commission that the Ali administration promised? This regulatory body could have surely helped to interdict some of these shenanigans. Or should the country look for even more radical options like asking for expertise from countries like Norway which are relatively free of corruption and have had long experience in the oil and gas industry? The public would surely be more confident that politicians and oil companies would have less leverage with the country’s revenues and issues of national importance.
The September 22nd editorial in this newspaper made the point that two matters have now been brought into sharper relief as a result of this scandal. Guyana’s profit margin has to be supplemented by US$107m as a result of the IHS Markit audit. Who is overseeing this and how will it be accomplished? Second, an even more important audit, one by the RHVE Consortium of US$7.3b in post-contract costs is meant to be wrapping up among the various parties. Can the public expect that this process will be soon concluded and the requisite measures, if necessary, taken in defence of Guyana’s revenues?
These are important questions facing the Ali administration and how quickly and efficiently they are handled will say a lot about whether this government can be trusted as a steward of this country’s oil revenues and much more.