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Guyana government releases April 2015 oil contract signed with Ratio Energy … deal similar to others before last general elections


 

By Kaieter News

GEORGETOWN
Petroleumworld 03 01 2018

The coalition administration yesterday released the petroleum agreement signed with Israeli-based, Ratio Energy Limited (REL), making it the third such agreement since a campaign promise leading up to the May 11, 2015 polls.

Former President Donald Ramotar, who had responsibility for petroleum at the time, signed with REL and Ratio Guyana Limited on April 28, 2015, days before the General Elections.

It was around the same period that the governing People's Progressive Party (PPP) knew that Esso Exploration and Production Guyana Limited (EEPGL) and its partners, including ExxonMobil, had struck oil.

The agreement bears striking similarities to previously released petroleum agreements, including 1% royalty, 50-50 share of oil production along with a list of pre-approved and certified items for importation.

According to the Ministry of Natural Resources, REL now operates as Cataleya Energy Limited, by way of registered change of name.

The company, according to officials, commenced negotiations in mid-2012 with the PPP for a petroleum licence within an area known as the ‘ultra-deep water Guyana basin' area. At the time, that area was known as Annex B. After the REL agreement was signed, the concession was then renamed the ‘Kaieteur' Block, and totals approximately 13,535 sq. kms.

The Kaieteur Block is located to the north and adjacent to the Stabroek and Canje blocks, approximately 250 kilometres offshore. EEPGL is identified as the operator and holds 50% interest, with REL holding 25% interest and Ratio Guyana Limited the other 25%.

The Ministry of Natural Resources noted that negotiations were nearly completed when, in October 2013, Venezuela seized an exploration ship which was operating on behalf of Anadarko. It took until the first Quarter of 2015 before negotiations resumed.

Contracts entered into with ExxonMobil and its joint venture partners, and CGX Energy, have also been released to the public.

ExxonMobil and its partners are the only ones that have struck oil, and since their 2016 contract with the coalition administration was released, there have been daily criticisms of the provisions which outline that Guyana ended up with a bad deal.

This newspaper understands that the model adopted by both governments was being used over the years dating back to the 1970s. Guyana has just about 10 existing contracts with various oil companies including ExxonMobil. These have all been modeled from a contract that the country had with Mobil, a company that had a presence in Guyana during the time of former President, the late Forbes Burnham. Government has boasted that with ExxonMobil, it secured a one percent increase in royalty, but industry experts have argued that by industry standards that figure should have been at least 10%.

Minister of State Joseph Harmon wouldn't admit that the ExxonMobil contract was a bad deal. The Minister has said that Government will be looking to deal with the issues going forward.

The release of the REL contract comes at a time when there is a flurry of activity in the industry in the past three days. ExxonMobil announced another major oil find, bringing the total number of positive discoveries to seven.

Government has taken steps to establish a Department of Energy that essentially takes away management of the industry from the Ministry of Natural Resources and hands it to the Ministry of the Presidency.

 


Story from Kaieter News

Kaieteurnewsonline.com
01 03 2018

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