–Min Trotman says push for 2020 production start was in Guyana’s best interest
THE push for oil production to begin in 2020 was part of a deliberate strategy by the Government of Guyana to ensure that its neighbour to the west, Venezuela, does not continue to lay claim to the area where Exxon Mobil’s Liza well is located.
Minister of Natural Resources, Raphael Trotman, made this very interesting disclosure on Friday during the opening of a two-day Guyana Oil and Gas Law Training Development Conference at the Ramada Georgetown Princess Hotel at Providence, on the lower East Bank.
Trotman,in his address to the gathering of legal professionals provided a timeline of Guyana’s progress relative to its growing oil-and-gas sector. He told participants that it was on May 26, 2015, the very day of President David Granger’s inauguration ceremony, that Venezuela, through its president, Nicolás Maduro, issued a decree declaring all of the territorial waters known to be Guyana’s as theirs.
Said he: “It was important to us that we secure and anchor the company in Guyana, and it was important to us that we moved to production at the fastest possible time.
“Why? Yes, we wanted economic benefits! But more importantly, because of the re-drawing of the lines by Venezuela!”
As the minister explained, though the Liza Well is located some 123 miles off the coast of Clonbrook-Mahaica, yet Venezuela unilaterally incorporated that area onto its map.
“The line that was drawn took the Liza Well in,” he said, adding: “Venezuela claimed the Liza Well as theirs on May 26, 2015. Through diplomatic efforts, via the President and Minister of Foreign Affairs, we managed to have that line withdrawn, but the intention was made very clear.”
He went on to say, “It is important for Guyana to move to production as quickly as possible, so we could assert when we got to court that production was taking place within the territorial waters of Guyana.”
He said, too, that by so doing, Guyana would have an indisputable fact to present before the International Court of Justice (ICJ). “If it was that there was no production, it would be a matter for dispute as to where the realm stood. So, getting to production was strategic, because it had to do with sovereignty,” Trotman stated, while noting that the terms of Guyana’s agreement with U.S. oil giant ExxonMobil remains the same, but with a few additions.
Noting that it is important to understand Guyana’s position, given that Venezuela had claimed full ownership over an area where a significant oil find was made, Minister Trotman said:
“It is instructive that this be linked to the picture of Venezuela claiming our oil; it is instructive that the two things are not separate and apart… There has been a timeline leading to certain happenings; it is not a coincidence or happenstance that Venezuela claimed ownership over Guyana when significant quantities of oil were discovered.”
Earlier this year, United Nations Secretary-General António Guterres forwarded the age-old controversy to the ICJ. Guyana and Venezuela have been at loggerheads over the territorial matter for decades, with the latter’s army entering Guyana’s shores repeatedly.
Thus far, ExxonMobil has found seven commercially viable wells that will result in Guyana producing some 500,000 barrels of oil daily. Meanwhile, addressing the discourse surrounding Guyana’s contract with ExxonMobil, Trotman said that the agreement is no different from others entered into by the past administration.
Cases in point, he said, were those contracts agreed between the government and REPSOL, CGX Energy, Ratio, SA Nabi, and JHI Associates. “Exxon did not bring a contract to Guyana and say to us, ‘Take this.’ We used the updated model that the GGMC (Guyana Geology and Mines Commission) and the government had in place, as was already advertised, to do the updating. So it was the Guyana model that was used,” Minister Trotman said.
He also made the point that under the 1999 contract, there was a one-per-cent royalty to be paid by the government from its share of the profit. He said that in a sense, it was a nominal royalty that amounted to zero, because the government was being asked to pay itself a royalty.
On the other hand, under the 2016 contract, there was a raise to 2 per cent of the gross earnings. “So we moved from a situation of zero to two per cent,” he said, adding: “We had certain factors influencing our decisions.”
He made it clear that there was no breach of the 1999 agreement with ExxonMobil; that there was nothing that said it had to be changed; that it had not expired.
“Both parties voluntarily agreed to engage in a process of updating, or tweaking it to some extent. So it was not some new sinister agreement pulled out in a dark room some place,” the minister assured his audience.
In January of this year, ExxonMobil announced its sixth oil discovery offshore Guyana, adding to its previous world-class discoveries since 2015.
According to a release from the company, its Ranger-1 Well encountered approximately 230 feet of high-quality, oil-bearing reservoir, located some 60 miles north-west of its Liza Phase One project within the Stabroek Block.
Exxon said that the new discovery provides a new play concept for the 6.6M-acre Stabroek Block. The Ranger-1 Well discovery adds to previous world-class discoveries at Liza, Payara, Snoek, Liza Deep and Turbot, which are estimated to total more than 3.2 billion of recoverable oil-equivalent barrels.