…SARA probes to zero in on possible breach of petroleum agreement

AS part of its investigation into the awarding of oil blocks offshore Guyana, the State Assets Recovery Agency (SARA) will be looking into whether “junior” companies, awarded contracts by the former administration, are in breach of their Petroleum Prospecting License (PPL) agreement.

According to the Petroleum Agreement signed by former People’s Progressive Party (PPP) President, Donald Ramotar and seen by this newspaper, Ratio’s PPL expired on April 28, 2019. Ratio Guyana holds 25 per cent share in the Kaieteur Block and is currently one of the companies under investigation by SARA.

Within the Petroleum Agreement, signed April 28, 2015, Ratio was required to carry out prospecting operations in the contracted area over a period of four years. Under the heading ‘Exploration Programme and Expenditure Obligation’, these requirements were broken down in 24-month phases.

Phase One included the acquisition of 2D seismic data from previous surveys conducted and, at the end of the 24-month period, either relinquish the entire contracted area or 25 per cent of the contracted area according to the Petroleum (Exploration and Production) Act.

Phase Two required the contractor to conduct additional surveys.

“During Phase two (2) of the initial period, the Contractor shall conduct a survey to acquire a minimum one thousand (1,000) line kilometers of new marine 2D seismic and/or five hundred square kilometers (500 sq. km) of new 3D seismic over the Contracted Area, process and interpret same,”the agreement stated.

Asked whether Ratio would have met any of the goals within the exploration programme, an informed source told the newspaper:
“We’ve not seen the plan they would have had to turn in…we don’t know if anything has been done and that’s part of the investigation; they were supposed to have done something, according to the document, within four years.”

The source also reasoned that JHI and Mid-Atlantic, having similar contracts which were given out only a month apart, are likely to be in a similar position. As such, the source stated that SARA will soon be speaking with the Guyana Geology and Mines Commission (GGMC); the Department of Energy and operators of the blocks for more information.

Speaking on what implications can arise should research verify that the companies were negligent in this regard, the source stated that, ultimately, the courts will decide. “What we are doing right now is doing baseline research. We’re looking at timelines to see when things happened and, based on that, we’ll be able to ask appropriate questions and seek the appropriate international help,” the source said.

“We are following our Bill. Whatever information we find, we take to a court, SARA does not make a judgement; I don’t think people understand that. We can’t go and seize anybody’s property from your bicycle to your pen to your house to your computer. Everything we do has to go to a court and then the court makes the decision based on the probability of the evidence.”

The source relayed that, currently, baseline research is ongoing whereby timelines are being reviewed and verified to guide appropriate interview questions.

Should incriminating information be found, SARA would not take on the role of judge or jury as the entity is obligated only to refers its findings to the courts. While some companies stall, others which have stakes in other oil blocks offshore Guyana, such as ExxonMobil and Tullow, have begun operations or have plans to do so.

ExxonMobil is well underway towards oil production in early 2020 while Tullow has announced US$80M plans to drill 3 wells; the first to be drilled this month. Such developments have resulted in comparisons from the well-learned to the average citizen who questions the awarding of the Canje and Kaieteur Blocks to companies since labelled as “junior” and “inexperienced”.

“The concessions are in deep-water. Canje and Kaieteur are in ultra-deep water which means it’s deeper than where Exxon has found oil,” the informed individual stated. “You would expect that any company that has been given such a concession would of had a proven track record, would of had a balance sheet, would of had assets other than this and would of had the ability to develop the block themselves in the same with that Exxon and its partners can develop the Kaieteur Block itself.”

ExxonMobil holds 35 per cent of the rights in the Kaieteur Block; Ratio Guyana holds 25 per cent; Cateleya holds 25 per cent and HESS holds 15 per cent.

In the Canje Block, ExxonMobil holds 35 per cent; Total holds 35 per cent; JHI holds 17.5 per cent and Mid-Atlantic Oil & Gas 12.5 per cent.
The source also noted that two of the participants in Mid-Atlantic Oil & Gas had blocks previously as a part of CGX Energy.

Founders of JHI and MOGI, John Cullen and Dr. Edris K. Dookie, are the original co-founders of CGX Energy. According to the Guyana Extractive Industries Transparency Initiative (GEITI), the Guyana Government awarded a Petroleum Licence to CGX in the offshore Guyana Basin in 1998.

In June 2000, CGX commenced drilling operations when Surinamese naval gunboats forced the jack-up rig off the Eagle-1 well. Following legal proceedings at the International Tribunal on the Law of the Sea (ITLOS), the maritime border dispute with Suriname was resolved.

Years later, following a resolution, CGX was awarded a Petroleum Licence for the Corentyne Block on November 27, 2012 and then, in February 13, 2013, the company was awarded a Licence for the Demerara Block. “The company initiated various exploratory surveys but over the years, work has been paused as further options are reassessed. In December 2017, CGX committed to a restructured programme of work covering the Corentyne and Demerara Blocks,” the GEITI website stated.

In light of the known challenges, the well-informed source questioned: “Two of the participants in the Mid Atlantic company had blocks before as part of CGX; why then would you even give them additional blocks?”

While JHI and Mid-Atlantic released a joint statement on June 1, 2019 defending their experience in offshore petroleum exploration, the source corrected that is issue is not the possession of an experienced team but the work plan of the companies.