Govt must examine feasibility of further ExxonMobil exploration – TIGI

… says global economic outlook puts big profits in doubt

Citing the lack of clear response from Government, Transparency Institute of Guyana Incorporated (TIGI) has called for the Administration to provide information on what steps it has taken to get information from ExxonMobil on further exploration it is doing in the Stabroek block.
According to TIGI, on Saturday the organisation wrote to Natural Resources Minister Raphael Trotman, requesting clarification on whether he had asked ExxonMobil to submit a feasibility study. This study is in light of its proposed Stabroek Block development.

“This letter was delivered on March 29, 2017, and we obtained acknowledgement of receipt almost a month later by calling to enquire on April 27, 2017. Even after this time, however, we were unable to obtain a clear response about whether or not a response is forthcoming,” TIGI revealed.
“As Guyana engages in its quest for Extractive Industry Transparency Initiative (EITI) candidacy, it is important to ensure that the Ministry of Natural Resources is committed to the endeavour. (This is) considering that EITI is a global standard to promote accountable management of oil, gas and mineral resources, and knowing of Guyana’s stated interest in implementing this standard,” the letter stated.
In its letter, TIGI had referred to the uncertain future of international oil prices and the effect that Organisation of Petroleum Exporting Countries (OPEC) induced production cuts would have on oil prices. In light of these factors, TIGI expressed the importance of determining the feasibility of the project.
“TIGI imagines that the Government of Guyana would want to know with a high degree of confidence that production licences are only issued for projects that are economically feasible. TIGI is also keen, as might be the Government of Guyana, that the extraction and production of oil in the Stabroek Block would yield a return that is consistent with the expectations of Guyanese.”
Referring to a recent research report by multi-national investment bank Goldman Sachs, TIGI noted that even with an extension of the production cut by OPEC the prices may not raise. This, TIGI observed, is because of a record increase in non-OPEC production that would prevent a significant increase in oil prices.

“When profitability margins are tight, as they must be in the current economic environment, profit maximising companies will be inclined to take greater risks, especially if they are not contractually required to themselves underwrite those risks.”
With this in mind, TIGI requested that Minister Trotman share with it the “types and particulars of the studies and investigations he has requested as part of the process for evaluating Exxon’s production licence application.”
“We further wish to know if the documentation listed under Section 10 (e) of the “Form for Application for a Petroleum Production Licence” as prescribed by the Regulations accompanying the Petroleum (Production and Exploration) Act of 1986, and in particular subsection (f) of Section 10 (e), will be required in the evaluation of ExxonMobil’s application.”
According to TIGI, it is all the more important for citizens, civil society and agencies including TIGI to ensure that the similar interests of the Government and ExxonMobil do not affect the Government’s commitment. That commitment, according to TIGI, is to both the financial returns to Government coffers as well as environmental safety.