Suspicious awards and shares
trading in Kaieteur oil block
Map showing the Kaieteur Block.
By Kaieteur News
Petroleumworld 05 30 20
Cataleya Energy Limited (CEL), the company that was first awarded the Kaieteur Block in 2015 by former President, Donald Ramotar, has sold one fifth of its 25 percent working interest in the offshore concession to Hess Corporation. As a result of the transaction, Hess' working interest has moved from 15 percent to 20 percent, while Cataleya is now left with 20 percent. Meanwhile, the other partner on the block, Ratio Guyana Limited, holds a 25 percent stake while ExxonMobil's subsidiary, Esso Exploration and Production Guyana Limited (EEPGL), holds 35 percent, thereby making it the operator of the block.
The sale between Hess and Cataleya was reported by Westmount Energy Limited, a UK investment firm that gives overseas firms opportunities to buy shares in the licenced operators of Guyana's offshore blocks. According to Westmount in its latest report, the increase in Hess' working interest has occurred on the back of the Tanager-1 oil discovery, announced in November, 2020.
Westmount noted that Tanager-1, the first well drilled on the Kaieteur block, encountered 16 metres of net oil pay (20oAPI oil) in high-quality sandstone reservoirs. The UK firm said that the well was reported as an oil discovery, which is currently considered to be non-commercial as a standalone development. Furthermore, Westmount cited aspects of a post-well report by Netherland, Sewell & Associates Inc. (“NSAI”) which state that the Tanager-1 discovery contains a ‘Best Estimate' of Unrisked Gross Oil Resource totalling 65.3 million barrels.
Following the announcement of the farm down, Gerard Walsh, the Executive Chairman of Westmount was keen to note that the move is consistent with the Stabroek partners' assessment that the potential of the Guyana-Suriname Basin is now more than twice the discovered resource to date – indicating a potential in excess of 10 billion oil-equivalent barrels across the basin. Additionally, Walsh whose company holds a 5.3% share capital in Cataleya Energy Corporation, the parent company of CEL said, “We believe this farm-in transaction reflects confidence in the prospective resource potential of the Kaieteur Block and augurs well for the continuing exploration of the area.”
CALLS FOR INVESTIGATION
For several years, this newspaper was at the forefront of calls for there to be a thorough, independent investigation into the award of two blocks, Kaieteur and Canje, since several industry stakeholders who examined the matter, concluded that they were awarded under suspicious circumstances.
With respect to the Kaieteur Block, this publication previously reported that it was awarded by Ramotar on April 28, 2015, just two weeks before the 2015 general and regional elections on the advice of former Minister of Natural Resources, Robert Persaud. Two companies received the block with 50-50 stakes, Ratio Energy Limited (now Cataleya Energy Limited) and Ratio Guyana Limited.
Ratio Energy was incorporated in Gibraltar on April 15, 2013, and registered in Guyana on October 23 later that year. Independent watchdog, Global Witness, said in its damning report ‘Signed Away' (which was subsequently pulled by the organisation), that at the time of receipt of the block, the company was owned by an Israeli-based lawyer named Richard Roberts.
Ratio Energy's name was then changed on August 3, 2017, after it received the Kaieteur Block. Its two directors are Canadian, Michael Cawood and Guyanese, Ryan Perreira, who have experience in mining.
Cawood's LinkedIn page lists him as Cataleya's Director and Chief Executive Officer. Pereira's LinkedIn page lists him as Cataleya's Director and Co-founder.
Research also revealed that Perreira has a history of collaboration with Cawood's Riva Gold Corporation. In 2010, agreements were announced meant to allow Riva the option to acquire the rights to certain groups of mineral properties in Guyana, specifically gold. Importantly, neither of these men had any experience in oil exploration to talk about prior to Cataleya's receipt of the Kaieteur block.
The other initial owner of the Kaieteur block is Ratio Guyana, a subsidiary of the Israeli company, Ratio Petroleum. The parent company has been active in the oil industry for decades.
Subsequent investigations showed that when Cataleya and Ratio Petroleum got the Kaieteur Block, they quickly sold it off piece by piece to ExxonMobil and later on to Westmount, without doing any work. In fact, Cataleya and Ratio Petroleum each sold 25 percent of their Kaieteur Block ownership to ExxonMobil in March 1, 2017. ExxonMobil then sold part of its stake to Hess in April, 2018. Global Witness had said it gathered from Ratio Petroleum's website that the companies didn't even conduct seismic work before ExxonMobil bought its share. It was only months after Exxon bought into the block that the oil major started a seismic survey. Exxon's work revealed that the Kaieteur Block has an estimated 2.1 billion oil-equivalent barrels.
Further to the fact that the original owners quickly sold portions of the block despite commitments in the Production Sharing Agreement to undertake several exploration activities, this newspaper had shown that the owners of the Kaieteur Block had set the stage for secrecy in their acquisition of the block by incorporating in a jurisdiction notorious for financial secrecy. The use of secrecy jurisdictions like Gibraltar is what allowed the companies to keep the details of their transactions with ExxonMobil under the radar.
In addition to the aforementioned, this newspaper had exposed that while Ratio Guyana's parent company, Ratio Petroleum, has nearly three decades of experience in the industry, it does not have the capacity to conduct ultra-deepwater drilling, which is required for the Kaieteur acreage. Only a handful of oil companies have the capacity to drill in ultra-deepwater, including ExxonMobil, Royal Dutch Shell, Chevron, BP, and Total SE. Ultra deepwater has been closed to drilling for decades because companies just didn't have the technology and the experience. Besides, there was a lot more oil and gas accessible in shallower waters.
Though the foregoing points among others were brought to the attention of Vice President, Dr. Bharrat Jagdeo, last year November, he was adamant that no corruption took place. He even stated that no laws were broken. Furthermore, he expressed confidence in former President, Donald Ramotar, who signed the Kaieteur and Canje agreements away in 2015, just before he was ousted by the David Granger coalition in that year's election.
“I'm convinced from knowing Ramotar,” Jagdeo said, “that there was no corruption.”
In his view, the issues raised by Kaieteur News over the years can be explained away since in that time, before the discovery of oil, Guyana was liberal with the way it went about issuing licences. He also responded to the assertion that the blocks were given to companies that are not capable of developing them, positing that even oil majors like ExxonMobil and Total SA would take licences and flip them.
This is what the initial owners of the Kaieteur and Canje blocks did, without doing any work.
“So whether you have capability or not,” Jagdeo said, “that was never a requirement of the [Petroleum] Act, particularly in that period when you did not find oil… People would have to face a whole range of questioning, even with the transferral [of stakes].”
At the present time, he said, there would be much more stringent measures to determine the capability of applicants before awarding licences. The Vice President was also asked to say whether he would support an independent probe by a competent foreign investigator. Jagdeo refused to commit to having said probe then. He said that he would not commit “at this stage.”
Preceding any investigation, Dr. Jagdeo had said he asked for internal documents to be prepared to get an understanding of the approval process for the awards of the blocks in 2015, the timelines for the incorporation of the companies which received the blocks, and the names of individuals involved.” In the meantime, he had said he found no breach of the law because “what has been raised [is] a lot of speculation.”