Local transparency watchdog, the Transparency Institute of Guyana Inc (TIGI) is calling on the government to make full disclosure of its contract with oil giant, ExxonMobil.
TIGI said full disclosure would assure Guyanese living at home and abroad that negotiations with the oil major are in the best interest of the country and to eliminate concerns of corruption.
“An indispensable approach to evening the odds that are stacked against Guyana in the negotiations is to publish the contract drafts and make the negotiations accountable to Parliament. In this way, Guyanese of the diaspora whose knowledge is vast in this area will be able to make contributions to the process and thus protect our country’s interest,” the body stated.
Minister of Natural Resources, Raphael Trotman had declared that there was no need for Guyana to be making full disclosures about its contract with ExxonMobil.
“Full disclosure will not be to the national benefit or interest,” he had stated.
“We have no reason to go right now and expose all our business to the world when we don’t even have the resources actually in hand. Let’s get things in our hand, then we can go out and shout what we have,” the Minister had also noted.
The Natural Resources Ministry however subsequently revealed that Guyana is to receive a two-percent royalty on gross earnings and 50 percent of the profits of the oil proceeds when production starts in 2020.
But TIGI insists that the full details of the contract be released to the public.
“The government’s willingness to ignore the mountain of evidence against contract secrecy and the potential ills associated with a developing oil industry is baffling. This is especially so given its stated commitment to transparency and accountability. We call for a full release of the contract with ExxonMobil and its partners,” the statement read.
See below for the full statement from TIGI.
Guyanese have a special interest in developments with regard to the discovery of substantial amounts of petroleum in Guyana. We agree that the potential certainly exists for catapulting Guyana into a new sphere of economic growth. This not only provides an unprecedented opportunity for engaging all our human resources in guarding of our patrimony, but in fact demands that they be so engaged. This should be considered in the context of the worldwide recognition that especially in developing and transition countries, the emergence of substantial amounts of petroleum is associated with substantial increases in the level of corruption.
For some while now, there has been a growing clamour for disclosure of the contract with ExxonMobil and its partners. Each time this chorus strikes up, there is a refrain from the government citing reasons why it is best not to disclose. One reason advanced is that full disclosure would not be to the national benefit or the national interest. In fact, the Minister of Natural Resources was quoted as having said that “… We have no reason right now to expose all our business to the world.”
Google searches for “contract secrecy” and “transparency in government contracts” would lead to thousands of articles on the respective topics with the vast majority disagreeing with non-disclosure. This abundance of information supporting the position of abhorring contract secrecy is not a coincidence. It is the result of a mounting realization worldwide that contract secrecy is injurious to countries owning the resources, as the following examples contend.
(1) The article “Natural Resource Charter” argues that ‘Authorities should make available data and reports on licenses, geological surveys, cadastres and reserves, as well as economic, environmental and social impact assessments. Critically, authorities should also publish contracts and make them readily available online.’ Note that this Charter was published by the National Resource Governance Institute which is supported by UK Aid, the World Bank, and USAID, inter alia.
(2) The founder of Transparency International, Peter Eigen is quoted in the UK Guardian (https://www.theguardian.com/global-development/2012/oct/26/world-bank-contracts-online-transparency) as saying that “…although companies have the right to secrecy when contracting with each other, ‘different rules have to apply’ when a government is party to a contract” and that “confidentiality clauses are often overprotective and ‘sloppily written’, and must be subject to scrutiny.”
Need we remind of our own history with regard to unfavourably written contracts?
We believe that Exxon, the major player, has a reputation to protect and would shun corrupt transactions. While we hope this is true, corruption is not the only problem Guyana has to worry about when dealing with oil companies. One of these is the ability of a small country like Guyana to negotiate with a titan like Exxon. Most of the cards the government is keeping to its chest are stacked in Exxon’s favour. Exxon is a descendant of the company that invented the oil industry and a key player and superpower in this global sector. Exxon will have more information – a vital element of negotiation – than the Guyana officials will ever dream exists.
An indispensable approach to evening the odds that are stacked against Guyana in the negotiations is to publish the contract drafts and make the negotiations accountable to Parliament. In this way, Guyanese of the diaspora whose knowledge is vast in this area will be able to make contributions to the process and thus protect our country’s interest.
The other explanation being given for non-disclosure has to do with “national security,” but we are not convinced. First of all, it is near impossible to undervalue the amount of the oil potential that has already been disclosed to the public, by the international press and in investment circles. Secondly, Venezuela has already played its hand in furtherance of its claim to Guyanese patrimony; it is claiming the entire seaway far beyond its original claim to Essequibo. The amount of information about this oil discovery that can excite the avarice of neighbours is already publicly available. It is however, exceeded by the amount of information that was made publicly available in the newspapers of the world when Venezuela celebrated her satisfaction with the ruling of the 1899 award that she considered to be in her favour and which, on the prompting of the world powers of the 1960’s, she found it convenient to vitiate.
A security risk may also stem from physical presence in the oil exploration zone as experienced when Suriname moved against the CGX operations a few years ago. However, ExxonMobil is currently operating in the Stabroek Block. The link between release of the contract and security risk is tenuous and this calls into question the true motivation for secrecy.
The government’s willingness to ignore the mountain of evidence against contract secrecy and the potential ills associated with a developing oil industry is baffling. This is especially so given its stated commitment to transparency and accountability. We call for a full release of the contract with ExxonMobil and its partners.
Finally, as we considered the several calls for disclosure, we thought it appropriate to take a look at the existing law. We noticed that there might be a serious obstacle to disclosure embedded in governing law. The Petroleum Exploration and Production Act – Cap 65:10 seems to provide a built-in secrecy clause. Part II, S4 (http://goinvest.gov.gy/wp-content/uploads/Petroleum-Exploration-and-Production-cap6510-.pdf) provides as follows:
- (1) Subject to subsection (2), no information furnished, or information in a report submitted, pursuant to this Act by a licensee shall be disclosed to any person who is not a Minister, a public officer or an employee of the Guyana Geology and Mines Commission except with the consent of the licensee.
(3) Where a licensee is a party to a petroleum agreement the right of the licensee, his servants or agents to disclose information about prospecting or production operations under the licence shall be subject to any restrictions or limitations in that respect specified in the agreement.
(4) Any person who discloses information in contravention of this section shall, on summary conviction, be liable to a fine of seventy-five thousand dollars and imprisonment for three years.
This clause was inserted in 1997 and its application would mean that (a) all the information released to the public is what the oil companies now talking to GOG want released. We are not clear on whether this applies to the contract and hereby specifically ask this of the GOG. If it does, this would mean that the minister and the leader of the opposition have not been dealing with the Guyanese public in good faith since they would have known full well that they would be breaking the law by disclosing anything else but never cited the law as a reason. In that case, we will also be concerned about the very existence of this confidentiality clause and would want to know whether we can expect to see it removed in the revised act which is due shortly.