Whose orders was Minister of Natural Resources, Raphael Trotman, following when he signed away the Orinduik Block with a Production Sharing Agreement (PSA) that essentially provides no royalty for Guyana?
Opposition Leader, Bharrat Jagdeo, wants to know.
During a press conference yesterday at his Church Street office, Jagdeo admonished the Minister for his response to recent criticism of the terms of the PSA, for which British oil major Tullow is the operator.
A provision of the agreement has faced criticism for two issues. Firstly, the one percent royalty detailed in the PSA is an industry low, even lower than the two percent royalty in the Stabroek PSA that has fielded sustained criticism. Secondly, the one percent royalty is recoverable.
Commenting on this yesterday, Jagdeo said, “It’s not one percent because it’s recoverable. Recoverable means it’s zero. We have to pay their one percent royalty for them. That is the problem.”
Last week, Kaieteur News contacted Minister Trotman to explain the reason behind allowing this provision to be included in the PSA.
Trotman who signed the deal with Tullow Oil and Eco Atlantic would only say, “I’m unable to discuss beyond saying that, as with both contracts, I acted on directions, which I believe were in the best long-term strategic interest of the country.”
What is pressing to the Opposition Leader is finding out who passed down the directions.”
“Trotman said he’s been following orders to sign these contracts. Whose orders? This is something we should really pursue.”
Jagdeo said this response shows that the Government has abdicated its responsibilities to the oil sector, to spend more time on the campaign trail.
“They can’t represent the interests of Guyana. How could these people – Trotman and whoever he’s taking orders from – continue to represent our interests? They’re incompetent. They’re all talk. They’re not looking out for our interests.”
The recovery of the meagre one percent royalty was recently exposed in a report prepared by Hannam and Partners (Advisory), a leading independent investment bank that provides advice and access to capital. The document, purported to list the reasons Eco-Atlantic – an operator on the Orinduik Block – is an attractive bet for investors.
The document noted that one of the most attractive provisions in the Orinduik PSA, for which Eco-Atlantic, has a 15% stake, is that the one percent payable to Government, “can be claimed back through cost oil”.
So far, the current distribution of stakes, as approved by the Government of Guyana, is Tullow – 60% (Operator), Total – 25% and Eco – 15%.
Recently, Tullow announced that it struck oil on the Orinduik Block.
Tullow’s Chief Executive, Paul McDade, had noted that the discovery was made at the Jethro-1 well, which could hold more than 100 million barrels of recoverable oil.