Read the entire report and responses here.
Washington, D.C., February 3, 2020 – Exxon’s exploitative oil deal with Guyana will cause the country to lose up to US$55 billion, according to a new Global Witness investigation based on an OpenOil analysis.
The new report, Signed Away, shows
how the oil major used aggressive tactics and threats to pressure inexperienced
Guyanese officials to sign the deal for the Stabroek license – one of the
world’s largest oil finds in years.
“It is shocking that Exxon would seek such an exploitative deal in one
of the Western Hemisphere’s poorest countries,” said Jonathan Gant, Senior
Campaigner at Global Witness.
“Guyana’s urgent development needs – such as building new hospitals and
schools, and protecting itself from rising sea levels that put 90% of the population
at risk – will not be met by Exxon walking away with an extra US$55 billion in
its back pocket.”
Exxon’s original license for the Stabroek oil block – off Guyana’s
Caribbean coast – dates back to 1999. However, in April 2016, after Exxon found
oil in the block, the company set out to pressure Guyanese officials to sign a
rushed, new contract to renew its oil license – knowing that its existing
license was running out.
Evidence seen by Global Witness shows how Exxon paid for a lavish trip
for Natural Resources Minister Raphael Trotman to visit its Texas headquarters
during the Stabroek negotiations. The trip included a first-class flight,
limousine transportation, and an extravagant dinner at an exclusive restaurant.
This may violate Exxon’s internal policy, stating that staff should
consider whether gifts to officials may “improperly influence pending business
decisions.” Exxon denies any wrongdoing, saying it is “committed to the highest
standards of business conduct, and we follow all local laws and regulations,”
while Trotman has said he saw nothing wrong with travelling to Texas on Exxon’s
The investigation also reveals how Trotman knew Exxon would soon
announce its oil find results, but rushed to sign the deal anyway, despite the
advice of experts.
Trotman may have also suffered from a possible conflict of interest as
he has been close political allies with one of Exxon’s Guyanese lawyers. The
lawyer – Nigel Hughes – has denied he represented Exxon on the deal, but
admitted that his firm has represented Exxon since 2009 and that he has worked
for the company on other matters.
Global Witness does not have evidence that Trotman’s Stabroek
negotiations were influenced – unwittingly or otherwise – by his expensive
Texas trip or his ties to Hughes. But the relationship between Trotman, Hughes,
and Exxon should be investigated.
Global Witness calls on Guyanese officials to investigate the Exxon deal and the ministers involved, and to demand a new, fair license. Global Witness also calls on US authorities, including the State Department, to support renegotiation.
A fiscal study conducted by the expert analysts at OpenOil –
commissioned by Global Witness and released alongside this investigation – estimates
Guyana is set to lose an average of US$1.3 billion per year. Recovering this
money through renegotiating a fair deal could boost the country’s annual US$1.4
In letters to Global Witness and OpenOil, Exxon disputed OpenOil’s
findings, saying that they did not account for Guyana’s “frontier” status as an
oil producer. However, the company did not comment on the detail of OpenOil’s
fiscal analysis. Trotman also told Global Witness that getting maximum revenues
from Exxon was not the government’s main aim and the country needed Exxon to
help protect its borders from Venezuela.
Guyana’s Foreign Minister Carl Greenidge argued that any analysis must
focus not only on financial data from international oil deals but on Guyana’s strategic
considerations and the risk to Exxon of military conflict in the area.
OpenOil studied reports of the financial terms of government oil
contracts around the world, including by the International Monetary Fund. These
reports show that, based on international data, Guyana is receiving a lower
profit share from Exxon than many other international oil deals.
The Stabroek deal is not the only questionable license that Exxon
obtained in Guyana. Evidence seen by Global Witness also shows that the two
other Guyanese oil licenses – called Kaieteur and Canje – raise red flags for corruption. They
were initially awarded to companies with limited experience that flipped shares
of their licenses to Exxon before doing any real work.
The official who awarded Kaieteur and Canje – former Natural Resources Minister
Robert Persaud – issued the licenses just before leaving office in 2015 and has
shown an extraordinary degree of ignorance about the ultimate owners of the
winning companies. The companies who initially obtained Kaieteur and Canje have
denied wrongdoing, as have Exxon and Persaud.
“Exxon’s Kaieteur and Canje licenses raise corruption red flags and
should be investigated,” said Gant. “Given these problems and the threats to
Guyana posed by the global climate emergency, Guyana should renegotiate the
Stabroek license and then ban all new drilling in the country.”
Global Witness calls on Guyanese officials to:
- Renegotiate Exxon’s Stabroek license to get the revenue Guyana needs to build a strong economy following the country’s Green State Development Strategy.
- Ban all drilling and extraction in areas other than
where oil has already been found to help fight the climate emergency.
- Investigate the process by which the Stabroek license was negotiated.
- Investigate officials and companies involved in the Kaieteur and Canje licenses to determine if there were any irregularities in the awarding of those blocks.
Notes to editor:
See the full report Signed Away:
How Exxon’s exploitative deal deprived Guyana of up to US$55 billion here.
Exxon’s license was analyzed by the financial experts at OpenOil. A full version of the report – commissioned by Global Witness and entitled How much revenue will Guyana lose out on in Stabroek? – can be found here.
For Exxon’s April 2015 Guidelines to conflicts of interest policy, directorships policy, and gifts and entertainment policy, visit https://careers.exxonmobil.com/-/media/files/offer-letter-attachments/canguidelinestocoidirectorshipsgepolicyenglishapr2015.pdf.
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