Infrastructure For Oil And Gas Benefits Not Yet Defined

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John Ogiste, Energy Officer in the Ministry of Energy has disclosed there is no infrastructure currently set up for Grenada to benefit from the oil and gas discovered in the island’s maritime space as announced in late 2017.

He has confirmed that a USA-based Chinese company recently partnered with Global Petroleum Global (GPG) to develop the infrastructure that will allow for the development of that resource.

“The studies are taking place for the infrastructure to happen, the infrastructure has not been defined as yet,” Ogiste said, during Tuesday’s weekly post-cabinet briefing. “The company is required to drill 3 more wells to determine where that production well will be and this is important for the infrastructure, because that production well will be the point at which they will do all the extraction of the gas and other oil to transport it to the Hibiscus platform so that it could be refined.”

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Last year Energy Minister Gregory Bowen disclosed that the GPG – the company that received the licence from Grenada’s Government to engage in the exploration – had run into financial problems after the first drilling, but had since entered into a partnership with a Chinese company.

According to public records, GPG, which registered in Grenada in 2003, was listed as having 100 million shares. As of December 2017, the Belizean company, Multiple Investment Ltd, was listed as a shareholder.

Bowen did not provide the name of the Chinese company back then and on Tuesday, Ogiste who was providing an update Grenada’s oil and gas discovering was also unable to provide the name of the company, but disclosed that it was based in the USA.

“GPG has partnered with a Chinese company that is functioning in the US. They are doing petroleum operations in the US, so they partnered with this company, in going forward to develop the infrastructure for the extraction for the prospect which has been discovered in the Nutmeg platform,” he said.

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A November 2018 a report on the website interfaxenergy.com said that the Russian multi-industry holding company called Sistema is considering selling its beneficial stake in Global Petroleum Group (GPG) that produces oil and gas in the shelf zone of Grenada partially or fully. Sistema’s core owner Vladimir Yevtushenkov did not elaborate, but was quoted as saying that they were discussing the deal with Chinese buyers among others, and that one large Chinese fund was interested in the asset.

In 2013, Sistema’s Cyprus unit bought 50% in Multiple Investments, which controls GPG that has the only licence for production of hydrocarbons in Grenada’s shelf zone. Later Sistema issued 2 loans to GPG to support exploration and drilling – an unsecured US$69.2 million loan and a $100 million loan secured by a 19% stake in GPG.

Ogiste said Grenada’s oil and gas exploration was issued in accordance with the Petroleum and Natural Gas Deposits Act. The act was approved in both houses of parliament in 1989, and came into effect as of 16 August 1991, and was amended in 2007.

Under the legislation, any company that is exploring for oil must initially apply for an exploration licence. “Once that licence is approved, you go ahead and do the exploration or study, whatever study you need to conduct, whether it is 2D or 3D for the geological studies to find exactly where you should do the drilling. Once that is achieved you have to submit a report that supports that, and that qualifies you to get what is known as a development licence,” Ogiste explained.

Ogiste said that once a company has an exploration licence, it must pay an annual fee to the Government. However, in the area of exploration licence in the recurrent revenue functional classification in 2019 annual Estimate of the Revenue and Expenditure, there is zero amount projected for 2019 and 2020, but for 2018 the amount was EC$5,356.

Elaborating further he said that implied in both of these licences, the company will be assigned a certain amount of blocks or acreage of Grenada’s maritime territory and every year you will be required to pay, as spelled out under the schedule in the act, a fee for the use of the blocks that you want to study.

“Once you have successfully done the drilling portion of it and the appraisal report is submitted as we see here with GPG and partner, they going ahead to develop the production well that will allow full production or extraction of these resources so that they will able to market it,” he said.

Ogiste said that once that has been achieved, the licencee is able to market these resources and they will receive revenues from that. There will be an agreement with the government that a certain portion of those revenues would be paid directly to the government from the marketing of these products.

“In the petroleum industry that is not something that is published. That is an arrangement that has to be agreed between the parties that signed it, that no one can go ahead and independently publish this. Even if you go to Saudi Arabia or Trinidad you cannot get it on the street. It is a standard in the industry that even after, I who have been working with one of these companies in the industry, I have a gag on my mouth for at least 7 years. I cannot even speak of it because I will be prosecuted,” he said.

Recently it was disclosed that the National Gas Company (NGC) of Trinidad and Tobago and GPG are to conduct a feasibility study with the aim of building a $3.4 billion pipeline deal signed to transport the gas obtained in Grenada’s maritime space to Trinidad.

Source Now Grenada

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