Ramotar gave 2-billion-barrel Kaieteur block away for free without public tender
Kaieteur News – Former President and Minister of Petroleum, Donald Ramotar, handed the ultra deepwater Kaieteur block to two companies, Ratio Energy Limited (now Cataleya) and Ratio Guyana Limited, for free.
Had the People’s Progressive Party Civic (PPP/C) government waited and developed its capacity to subject the award to open, public tender as is a norm in the oil industry, it would have gotten millions of US dollars in the form of a signing bonus.
Guyana failed to wait and study its offshore area, instead handing the Kaieteur block to unqualified companies just days before the 2015 general and regional elections.These companies went ahead two years after receiving the block and sold away 50 percent of the rights to ExxonMobil, and the oil major became the operator of the block.
ExxonMobil’s study of the block has revealed just how much Guyana lost when Ramotar gave the block away for free. Two months after it received the Kaieteur block in 2017, ExxonMobil started a 3D seismic survey which found nine exploration prospects there.
Back in May 2019, a Competent Person’s Report (CPR) on the Block, was carried out by Netherland, Sewell & Associates Inc. (NSAI) which provided estimates of the unrisked prospective oil resources in the nine prospects.
The report states that the Kaieteur block holds a gross estimated prospective resource of 2.1 billion oil-equivalent barrels. ExxonMobil is currently drilling the Tanager-1 well, estimated to hold 256.2 million barrels.
Guyana’s first million barrels of oil were sold at US$55 a barrel. At that price, the Tanager-1 well alone would be worth more than US$14B. That’s almost ten times Guyana’s 2020 budget.
The entire 2.1-billion-barrel block, at US$55 a barrel, would cost US$115B. That would be 77 times Guyana’s 2020 budget.
It is this knowledge that governments leverage to ensure that when they grant the rights to oil companies to operate blocks, taxpayers make money even before the oil is produced.
Take the example of Guyana’s immediate neighbour to the East, Suriname. Earlier this year, Suriname announced, during an oil and gas conference in Trinidad & Tobago, that it would be preparing to sell stakes in a large shallow water, offshore area. The area has been studied for sometime by Suriname, and the country has amassed a wealth of data which it will now use to market to international oil companies for millions of dollars in signing bonuses.
Guyana forfeited this opportunity in the award of the Kaieteur block, which has been found to be riddled with red flags pointing to the need for serious investigation.
Kaieteur News’ series on this block has unearthed that the recipients of the block were unqualified, that they flipped the block without doing any work, and that they registered in Gibraltar, a jurisdiction notorious for financial secrecy, allowing them to hide the details of the transaction with ExxonMobil.