If contact appears illegal, challenge it – economist

Oil and gas sector

…calls mount for national oil spill contingency plan

By Samuel Sukhnandan

Former presidential advisor and economist, Ramon Gaskin has urged Guyanese to approach the courts if they feel the current oil contract signed between ExxonMobil and the Guyana Government breached the laws on petroleum exploration and operation under current laws.
Gaskin’s comment came from a question posed to him during a formal discussion on oil and gas and other topical issues facing Guyana at the National Library on Tuesday. The outspoken economist said Guyanese need to become more aware of the issues related to the impending oil and gas sector.
“Any Guyanese could approach the courts to look at the matter. Anyone can do it.

But you won’t get the politicians to renegotiate because they already said they won’t do it… Even a new Government can come into Government can’t change the contract… Eventually there is where you have to go,” he stated.
Making references to the Petroleum Act, Gaskin told the small gathering that Section Two of the Act speaks about property in petroleum being vested in the State and the State will have the exclusive right over it. He, therefore, questioned why those exclusive rights have in a large way been given away.
Gaskin, a trained lawyer, told the forum that both ExxonMobil and the Government are in breach of the laws governing this sector. He noted that the Petroleum (Exploration and Production) Act sets out the provisions for companies operating in this sector. However, ExxonMobil has more than 600 blocks, when the law allows prospecting licence the oil companies to get more than 60 blocks.
And he pointed out that while this same law stipulates that each company is allowed only 10 years maximum to explore for oil before they have to leave, Exxon has been here for close to 17 years now.
Gaskin maintained that Exxon’s “prospecting licence was up since 2009 and according to the Petroleum Act, they should have left already. Both the old 1999 and new agreement signed with ExxonMobil violates the laws of Guyana in many areas, and that should be noted,” he contends.
The outspoken economist also raised the point that there is nothing in the oil contract about insurance, expect that ExxonMobil is self-insured. This, he said, leaves cracks open especially when it comes to environmental protection from oil spills, which happens in most oil producing countries.
“So if they destroy the (fishes, marine life) out there, you will have to go to him and make your claim (the same guy who just did it). However, in the African agreements, the oil company is required to hire an independent international company to do the assessment, and not to self-insure.
“While it should be a legal requirement to provide a performance bond and guarantees, we allow them to provide themselves (Exxon), rather than from an independent financial institution or bank,” he said.
Another issue raised by Gaskin is the provision for site visits. “The Minister has to give a seven-day notice, and also pay for his own expense and transportation. We should have people out there on the rig every day, seeing what’s taking place to guarantee that what we are getting is fair.”

Spills
While both ExxonMobil and Government have assured Guyanese that they have nothing to fear, as they are well prepared to take action in the event of an oil spill of any magnitude, there are no specific provisions set out in the agreement to deal with any such issues.
However, in the event of an oil spill that could have massive impacts on the environment particularly sea life, the Minister is responsible for responding to it and at the end presents a bill to the oil company.
Conservationist, Annette Arjoon-Martins, says a lot work has to be done before Guyana can truly be protected from the effects of an oil spill. She has since called for a national oil spill contingency plan.
“(So we) have to have a team of knowledgeable and capable people to respond and I would like to see that (arranged),” Arjoon-Martins had told the media recently.
Since Exxon announced its oil find in the Liza-1 well in 2015, a pertinent question has been the capacity of the relevant agencies to protect the environment in case of an oil spill. It is a topic that has regularly been raised at public lectures.
Last year, President David Granger commissioned Guyana’s first oil spill response operation service at the Gaico Wharf at Nismes, West Bank Demerara. Gaico Oil Spill Response Operation Services, which was coined by Komal Singh, was set up as a pre-emptive measure against probable spillage once production commence in the future.
The Gaico company began in 1991, with Singh working on small construction projects in Region Three (Essequibo Islands-West Demerara). At the commissioning, Singh had stated that he had noticed that there are a number of near misses of oil spills and decided to pursue the avenue of preparing for one in Guyana.
He said the company has since invested in a supply boat to work alongside rigs and supply them with fuel and cargo, while preparing for any occurrence of an oil spill.