Approaching IOCs to sell first lifts could lead to corruption – financial analyst

…questions Dept of Energy’s explanation for method to sell oil

The Department of Energy’s decision to approach several International Oil Companies (IOCs) to sell Guyana’s crude has not only raised eyebrows at the Audit Office of Guyana (AOG). It also has finance professionals questioning the move.
In an interview with financial analyst and accountant Sase Singh, he was of the view that the transaction leaves the entire process susceptible to corruption. This is not unique to Guyana, as many oil-producing countries have fallen prey to corruption in their dealings with various IOCs, who have been documented paying off officials.
“While we should have been able to go to the market in a transparent way to auction our oil, we have not done it. What is happening is a very opaque, dark, non-transparent transaction that is susceptible to corruption,” he said.
Singh does not believe in the explanation given by the Energy Department that the oil has to be subjected to tests not only in the refinery but also on the market. According to the financial analyst, persons’ familiar with the industry already have an idea of the value of Guyana’s crude and what kind of price it will fetch.
“Absolutely ludicrous. The world has already tested different shades and shapes of oil on all the markets. There is no need to reinvent the wheel. Selling oil is a standard operating procedure across the globe. People know what grade of oil to sell. People know what the market is like and how it operates. People know where the supply and demand is. There’s no testing needed for Guyana.”
“Seeing as they dropped the ball in 2019, they could have sold the first lifts to Exxon and say hey, we need some time to go to the market transparently, but we’re already doing business with Exxon. So sell the first and second lifts, this then gives us time to set up a system that is transparent. Why this deliberate attempt to go the dark way? It has exposed the transaction to corruption.”
The Energy Department had announced that it approached a number of IOCs, with a view of having them vie to sell Guyana’s crude. These companies include Exxon, CNOOC, Hess, BP (British Petroleum), Chevron, Shell, Total, E&I.
This news was immediately criticised by Opposition Leader Bharrat Jagdeo.
In addition, Auditor General Deodat Sharma has said in sections of the media that his department would look into the transaction.
Singh also spoke about the general lack of preparation for the oil sector. For one, first oil, he said, has come and met Guyana without critical safeguards like a Local Content Policy and related legislation.
He pointed out that the coalition Government knew definitively since May 2015 that Guyana had oil reserves. Singh pointed out that they had four years and change to put in place the necessary measures so that Guyana could comprehensively manage the sector. In that time, however, all the Government has completed is the National Resource Fund Act.
“Team Granger’s priorities is all pageantry, politics and parades. What they should be doing is spending more time on public policy formulation, conceptualisation and implementation, so that the good life can come to the people,” he said.
“But they only parrot this term the good life, without backing it up with actionable strategies. So they can come to the people and say, we have done this for you on this oil investment. And you can expect this and that by such and such a time. There is no project planning.”