Vreed-en-Hoop (Peace and Hope): Signpost of the Oil Oligarchy and Political Party Paramountcy in Guyana.

12 Min Read

August 3, 2023

Janette Bulkan is an Associate Professor in the Department of Forest Resources Management in the Faculty of Forestry, University of British Columbia. She is interested in old and new forms of enclosures which are not only about territory but also proprietary access to resources that are then incorporated into complex anastomosing supply chains. 

A priest once said with reference to a local bigwig in Guyana, an impoverished country perched on the northern shoulder of South America: “first you get on, then you get honest." That is, you need to acquire wealth before you can be philanthropic. Little of that culture of philanthropy appears to have survived among the crop of robber barons currently feeding at the trough of Guyana’s oil wealth. The sentiments embodied in the name ‘Vreed-en-Hoop’ (Peace and Hope) of a Guyanese village at the centre of international oil development interest, feel as distant now to the majority of Guyanese as they must have felt to the enslaved Africans, and then indentured East Indians, tied to the eponymous sugar cane plantation located at the mouth of the Demerara River during Dutch (1621-1803) and then British colonial rule that ended at Independence in 1966. Although the plantation is long gone, the plantationocene survives and thrives.1

This is a story of how wealth, dubiously generated through dealings in remote frontier regions, can be multiplied through interlocking political-business connections. It illuminates the imbrication in contemporary oil extractivism of favoured multinational corporations and the governments that control access to State resources. It is enabled by deep political divisions that tend to fall along racialized lines–descendants of enslaved Africans and indentured labourers from India–and that are largely dominated by coastal interests, furthering the marginalization of the Indigenous Peoples who account for roughly 10 percent of the population. The story includes some widely alleged shady dealings, but these have not been tested in legal courts–only spoken on the streets, and reported on social media and newspaper blogs. In Guyana, white-collar crime is very rarely prosecuted and even more rarely reaches convictions.

Gold and Black Gold

In the run-up to the 2015 general and regional elections, Guyana's then president, Donald Ramotar, secretly granted offshore petroleum tracts to nine major and minor companies.2 ExxonMobil has since farmed into or been appointed operator of some of those tracts. The licence holders, not the Guyanese exchequer, benefit financially from the multi-million dollar buying and selling of interests in these tracts. ExxonMobil held the Stabroek Tract, initially six million hectares (Mha), which was awarded to its subsidiary Esso Exploration and Production Guyana Limited (EEPGL) in 1999. The Stabroek Tract was reduced to 2.7 Mha by relinquishment between 2008 and 2016, and is held by the consortium of EEPGL, Hess of the United States, and CNOOC Nexen of China. A few Guyanese politicians at the helm of the executive arm of the then government, having zero experience of the petroleum industry, signed what is widely agreed to be one of, if not the world’s worst, production sharing agreement in mid-2016, including a stability clause which has essentially secured the dominance of ExxonMobil and co-venturers for forty years. 

ExxonMobil Guyana Headquarters in Guyana's capital, Georgetown. Photo courtesy of the author. ExxonMobil is building a US $160 million HQ on the outskirts of Georgetown, which will be paid for by Guyanese taxpayers.

In May 2015, on day fifty-nine of a sixty-day drilling programme, ExxonMobil announced the discovery of the first of a series of offshore deep-water petroleum fields in Guyana’s Exclusive Economic Zone. The declaration of discovery, as well as the leaking of it to the Minister of Natural Resources and the rapid deployment of superficial environmental impact assessments, all suggest that ExxonMobil had substantial evidence from prior studies of massive petroleum resources in the Liza oil field.3 The public announcement of the Liza-1 well suggested a resource of 1 billion barrels of oil equivalent (BOE). By 2023 oil resources were estimated at 11 billion BOE for just the south-eastern portion of the 2.7 Mha Stabroek Tract. Even though Guyana’s share of this oil wealth is unusually small by global standards, it provides a large extra-budgetary injection of cash to the controlling vice president. Parliamentary oversight of the management of this new wealth is also being blocked by abuse of parliamentary procedures by a blatantly biased Speaker.

Before the discovery of oil, the leading contributors to Guyana’s national exchequer were royalties and taxes from (mostly) artisanal gold mining. The gold mining and gold trading sectors are stratified by wealth and ethnicity—a small number of East Indians and Portuguese Guyanese dominate both in the area of mining concessions held and as licensed gold traders. African and Amerindian Guyanese are the majority of the >8,000 men who wield the spades and hold the hoses in the “gold bush.” Most of the mining concession holders are rentiers–renting space to the African and Amerindian “tributors” (the term in law) in return for a percentage of the tributors’ gold finds. Tributors have no written contract or other agreement recognized in law.4 

The annual report for 2017 of the Guyana branch of the Extractive Industries Transparency Initiative revealed the extent of the oligopoly with de facto ownership of mining concessions. Of the total 1,360 state-issued active small- and medium-scale mining permits, covering 1,235,851 hectares of land and river: by area, the top three companies held 16 percent; the top 10 permit holders 33 percent; and the top quarter–329–of permit holders owned 88 percent. Politically prominent miners also hold mining permits listed under other names or shell companies. 

Large-Scale Gold Dealers Linked to Politicians

The same pattern of oligopoly is evident in the choice of the eight gold dealers who are legally authorized to purchase gold on behalf of the Guyana Gold Board (GGB). All hold lucrative gold mining concessions and are closely connected to the apex of political power. Nazar “Shell” Mohamed is the largest gold dealer and also holds mining permits under his son’s name, Azruddin Mohamed, and other family members. Gold dealers have been implicated in the normalized smuggling of gold out of Guyana, never declared to the GGB as required by law. A Management and Systems Review of the Guyana Geology and Mines Commission (GGMC) in 2014 led by a former GGMC commissioner noted that “a cursory examination of the declaration by producers/declarers of gold and diamonds demonstrate absolutely no correlation between large claim holding [that is, by area] and production/declaration.”5 However, after the Venezuelan economy deteriorated in 2016, there was increasing evidence that Venezuelan gold was being laundered through Guyanese gold dealers. Legal and illegal gold are mixed with impunity.6

Porous and remote borders between the Guiana Shield countries–French Guiana, Suriname, Guyana, Venezuela and Brazil–allow gold to flow in different directions as taxes and government monitoring vary between countries and over time. Investigative reporting by InfoAmazonia provided information which vulnerable Guyanese journalists might know but dare not publish:

In the first five months of 2020, Guyanese gold dealers declared 940 kilograms more than the same period in 2019—a nearly 27 percent increase during the COVID-19 pandemic…Sources from within the sector, including gold traders, traffickers, and law enforcement, allege that at least two of Guyana’s licensed gold exporters—El Dorado Trading and Mohamed’s Trading…have purchased illicit Venezuelan gold…[and] occasionally buy gold directly from Venezuelan criminals…sindicatos or malandros…Mohamed’s Trading did not respond to requests for comment. One Venezuelan gold trafficker alleges …“Mohamed, that one, he is the tough one over there [in Guyana].” The trafficker claims that the military buys from the National Liberation Army (ELN) guerrillas…A source in a foreign intelligence service claims that Mohamed is the “main player” involved in trafficking illicit goods from Venezuela into Guyana, and then abroad.…The third-party gold dealer also claims that the leadership at Mohamed and El Dorado Trading know about the companies’ involvement with Venezuelan gold. “…they have to put up the money up front for the purchase of U.S. currency in Guyanese dollars to pay for the gold, and they themselves will have their security sometimes fly into the bush, into the interior.” …The leadership at both companies appear to be connected to political elites in Guyana; both allegedly donated funds to both the ruling and former government party.7 

In August 2019, the Royal Canadian Mint (RCM) suspended gold purchases from Guyana’s second-largest licensed gold dealer, El Dorado Trading, which is owned by Tamesh Jagmohan, following a complaint about illegally sourced Venezuelan gold filed via the Mineral Grievance Platform by the London Bullion Market Association.8 The GGB in turn suspended gold purchases from El Dorado Trading in September 2019. According to the former Chair of the GGB, the governor of the Bank of Guyana was troubled by the RCM suspension, saying in September 2019 that Guyana was “in big trouble,” that he had “evidence of Venezuelan gold being smuggled into Guyana,” and that the country was at risk of blacklisting.9 The RCM suspension of gold purchases from Guyana was still in place in June 2022.10 

Small-scale gold mining in Guyana. Photo courtesy of Microbiome (2021) 9:156. CC BY 4.0.

Across the tripartite border, the Brazilian Ministry of Justice and Public Security announced in July 2023 that it was conducting an investigation into a smuggling ring that involved a Guyanese businessman and concerned some US $16.4 million of gold illegally mined in Brazil.11

Gold Dealers Diversifying

Mr. Jagmohan was restored to good standing following the swearing-in of the current government in August 2020. In May 2022, he donated ten new vehicles to the Guyana Police Force. A month later, Jagmohan asked the Minister of Home Affairs to conduct an investigation of his business so that a “clean bill of health” could be issued.12 And in September, the government issued a U.S. $5.4 million contract to another of Jagmohan’s companies to build a 1.9 km “road to nowhere.”13 Although the road alignment runs through residential areas, no Environmental or Social Impact Assessment was done before the contract was awarded.14 

Mohamed’s empire-building also took off in tandem with that of the new government. In 2023, Mohamed’s daughter disclosed that the U.S. visas of the entire family had not been renewed since 2013.15 Soon after, a U.S. public relations firm that was also paid a retainer fee by the government of Guyana disclosed that it had been hired by ‘Shell’ Mohamed to clear his name in a bid to regain his U.S. visa.16 Mohamed has also thrown his hat into the political ring: he won a seat in the June 2023 local government elections representing the ruling People's Progressive Party (PPP). He also promotes himself as a philanthropist.17

Stone Quarry Licences

Most of the crony capitalist businesses spread their investments across a diversity of sectors, partly for speculation and money laundering but also because the insider information may show the benefit of investing in particular directions which will later link up. As the coastal lowland of Guyana is mostly free of substantial areas of rock, but stone is needed in huge quantities for the current frenzy of residential construction and road building, a rational decision is to acquire one of the rarely-granted licences for a hinterland quarry. On February 5, 2021, the GGMC issued four stone quarry licences over 6,677 ha to Hadi’s World Inc.–wholly owned by ‘Shell’ Mohamed– responding to an application dated December 2020 (three months into the new government’s administration). In 2023, Mohamed signed a partnership with China Harbour Engineering Company (CHEC) in a public ceremony, in which they announced that they would supply one million tonnes of stone aggregate on an annual basis to the Guyanese market.18

‘Port of Vreed-en-Hoop’ Shorebase 

Guyana’s muddy coastal lands were mostly reclaimed from the Atlantic Ocean during Dutch colonial times to create private sugar cane plantations. Most of these lands were nationalized after Independence from British colonial rule in 1966 but for a variety of reasons, many plantations have been abandoned. Although there are formal procedures for private acquisition of unwanted government-administered lands and other natural resources, it became customary from the 1970s and 1980s onwards for transactions to be decided more through administrative discretion than by following procurement procedures. This administrative discretion is exercised at the apex of the executive arm of government.

Oil investments are now being folded into these politically-favoured rent circuits. The oil fields that are 190 km offshore need onshore stockyards and supply bases. Ports need access channels, channels need dredging, dredgers need somewhere to dump the spoil, shorebases need sand and rock to make concrete. EEPGL needs these shorebases quickly, expects a 12 percent reduction in costs, and has start-up capital. Bingo… NRG Holdings Inc. had secured tenure of the prime lands onshore and offshore of Vreed-en-Hoop, and was politically well-connected. In July 2021, NRG Holdings Inc. announced its intention to construct a US $300 million ‘Port of Vreed-en-Hoop’ facility to provide services to EEPGL.19 NRG Holdings Inc. was formed by ‘Shell’ Mohamed, Andron Alphonso, a fellow large gold ‘miner’ and gold dealer and Nicholas Deygoo Boyer, then head of Georgetown’s Chamber of Commerce. Mohamed would be even more enriched as a major supplier, selling tonnes of stones to the ‘Port of Vreed-en-Hoop’ shorebase for making the concrete wharves and stockyards for pipes.

All of this of course threatens the ecosystems in the Guiana Current, which flows from the Amazon estuary north-westwards into the Caribbean Sea and the Gulf of Mexico, and is laden with mud and mineral nutrients that support a rich invertebrate fauna that, in turn, nourish at least 500 fish species. Guyana’s Environmental Protection Agency waived the need for an Environmental Impact Assessment for the ‘Port of Vreed-en-Hoop’, even though the project included the construction of an 18-hectare artificial island which has smothered the traditional fishing grounds of artisanal fishers and shrimpers.20 From around the time EEPGL started oil production in December 2019, artisanal fishers reported dwindling catches of fish and shrimp, which they linked to ExxonMobil’s seismic surveys, the removal of fish-sheltering wrecks from the Demerara estuary, the intense traffic from the consortium’s supply vessels, and more recently, the dredging to create the artificial island.21 In February 2023, Guyana’s President Mohamed Irfaan Ali visited the man-made island, part of the shorebase, signaling the government’s support.22 

Demerara River, 2010. CCO 1.0.

In reaction to the publicized complaints of the fishers, Guyana’s Maritime Administration Department (MARAD) said there were no charted fishing grounds in the area where the Demerara Ship Channel was being widened and deepened, and the island was being constructed.23 However, the official United Kingdom Hydrographic Office chart 519 , used by MARAD, clearly shows “fishing stakes, entry prohibited” on the east side of the Demerara River estuary.24 MARAD’s statement was further belied by the government’s one-off payout of US $750 to each registered artisanal fisher in July-August 2022, as a livelihood support measure. Payouts were made to 304 fishers from four communities whose catch landing sites are in or very close to the Vreed-en-Hoop shorebase.25

Questions have been raised about the sources of the funding of the Vreed-en-Hoop shorebase.26 Guyanese learned in March 2023 that ‘Shell’ Mohamed and his co-venturers are putting up US $50 million, and that ExxonMobil is putting up the remaining US $250 million in advance payments.27 Vreed-en-Hoop Shore Base Inc. (VEHSI) is owned 15 percent by the dredging company Jan De Nul registered in Luxembourg and 85 percent by NRG Holdings Inc.28 EEPGL has placed a 20-year services contract (lease) with VEHSI.29 In other words, ExxonMobil loaned the money to build the base and will exclusively operate the base for 20 years. 

Moreover, all of ExxonMobil’s advances will eventually be charged, with interest, to Guyana under the Production Sharing Agreement 2016. So, the Guyanese taxpayers are funding a shorebase owned outright by Mohamed and his partners (including, allegedly, silent political backers). However government propagandists continue to insist that, in spite of the evidence to the contrary, the Vreed-en-Hoop shorebase cannot be classified as a public-private partnership, but is wholly privately owned.30 

On 14 July 2023, Reuters’ lead story featured the U.S. government’s ongoing investigation into the alleged links of Nazar Mohamed and his son, Azruddin, to money laundering, drug trafficking and gold smuggling. Reuters reported that ExxonMobil ignored U.S government warnings and “cut a deal to build a $300 million onshore logistics base with a consortium that included…[t]he Mohameds.” According to U.S. intelligence, the Mohameds “have close ties with Guyana’s president and some cabinet members” whose government “controls access to vast and newly discovered oil reserves off the South American nation’s coast.”31 

Social Gains and Social Losses 

Guyana has almost zero qualified engineering expertise and experience for oil field work, so this enclave economy mostly operates with fly-in/fly-out crews. The shoreline of Guyana has fertile empoldered fields and biodiverse coastal waters that have fed its population for hundreds of years. However, the government has placed the needs of the Oil Patch over the livelihoods of farmers and fishers.

The tradition of crude ‘administrative award’ of government licences or concessions over natural resources was absolutely out of its depth when faced by the industrial monster of offshore petroleum in 1999 and again in 2016. It is obvious to many that a very small coterie of politicians and their crony capitalists have captured despotic powers and enormous wealth. The question is what to do now, especially for the 47 percent of the population who live below the poverty line of US $5.50 per day, for whom the government has no planning process to deliver long-term structural benefits.32 EEPGL has zero responsibility for them. For those in political power, the status quo is delightful. Although Guyana receives only a tiny fraction of the oil wealth that it should have secured, for the party in power the money is enough to exercise commercial patronage in the traditional way but on an unprecedented scale, to suppress dissent, and to buy electoral votes.

This narrative shows the enmeshment of the same dominant players from the old natural resources sector–gold–in the new Oil Dorado. In both, the lines between formal and informal, licit and illicit are blurred, with state complicity. Political party interests and private interests, transnational and local interests–all are interwoven for narrow personal gains. 

In November 2022, a Stabroek News journalist asked thirteen people in Vreed-en-Hoop Market to relate their experiences with the cost of living. Ten of the thirteen were East Indian-Guyanese (traditional supporters of the ruling party), and three were African-Guyanese.33 Their preoccupations were all about the struggle to survive, a reality completely alien to the state-supported private shorebase alongside the market. In the eight years since the ExxonMobil offshore oil discovery, the Guyanese population, including those interviewed in the ruling party’s stronghold of Vreed-en-Hoop, expect little hoop (hope) of transformative changes from the country’s oil wealth.34 Their daily reality is focused on trying to cope with the inflationary prices for food, rents, and transportation, all worsened by the oil bonanza. Vreed-en-Hoop, peace and hope, are as elusive as they were in slavery times when the plantation that gave the village its name was created.

Notes:

  1. Janae Davis, Alex A. Moulton, Levi Van Sant, and Brian Williams, “Anthropocene, Capitalocene, … Plantationocene?: A manifesto for ecological justice in an age of global crises,” Geography Compass 13, no. 5 (Apr. 2019).
  2. “Companies say award of Canje oil block licence was above board,” Stabroek News, June 2, 2019.
  3. “Exxon makes oil discovery offshore Guyana” Offshore Energy Today, May 8, 2015.
  4. Janette Bulkan and John Palmer, “Rentier Nation: Landlordism, Patronage and Power in Guyana’s Gold Mining Sector,” The Extractive Industries and Society 3, no. 3 (Decemember 2016).
  5. Grantley W. Walrond, L.J.L. Heesterman, and J. Goolsarran, Guyana Geology and Mines Commission Management and Systems Review [Inception Report]. Georgetown, Guyana: Mines Division, Land Management Division, and Geological Services Division (2015).
  6. Bram Ebus and G.I. Sutherland, “The toxic metal in the shadow of the gold industry,” Stabroek News, Aug. 30, 2020. See also Vikram Tamboli, “Hustling Fuel, Striking Gold: Smuggling in the Guyanese-Venezuelan Borderlands,” NACLA Report on the Americas 51, no. 4 (Dec. 2019).
  7. Bram Ebus, “Tracing tainted gold,” InfoAmazonia, Sept. 14, 2020.
  8. Marcelle Thomas, “El Dorado Trading denies illegal Venezuela gold link,” Stabroek News, Dec. 31, 2020.
  9. G.H.K. Lall, “In September 2019 BoG governor had said Guyana was in big trouble from smuggled Venezuelan gold” Stabroek News, May 27, 2021.
  10. “Jagmohan writes Benn seeking probe of gold business for ‘clean bill of health,’” Stabroek News, June 12, 2022.
  11. “Brazil probe fingers local businessman in gold smuggling, money laundering,” Stabroek News, July 12, 2023.
  12. “Jagmohan writes Benn seeking probe of gold business,” Stabroek News, June 12, 2022. 
  13. “Contract signed for widening of road between Conversation Tree and Sheriff Street,” Kaieteur News, Sept. 15, 2022.
  14. “Residents raise concerns over $1.8b Conversation Tree road project,” Stabroek News, Oct. 5, 2022.
  15. Hadiyyah Mohamed, “My father has and always will be transparent,” Stabroek News, Apr. 3, 2023.
  16. “US firm used by `Shell’ Mohamed had been working for Guyana gov’t -US$35,000 per month arrangement was terminated on April 5th,” Stabroek News, Apr. 14, 2023.
  17. “PPP Eccles/Ramsburg group selects ‘Shell’ Mohamed for upcoming LGE,” Stabroek News, Mar. 24, 2023.
  18. “Hadi’s World Inc, CHEC partner to supply 1M tonnes of aggregate annually,” Guyana Times, Apr. 7, 2023.
  19. “Multi-billion-dollar ‘Port of Vreed-en-Hoop’ facility in the works,” Oil Now, July 28, 2021.
  20. Janette Bulkan, “Why is there no EIA for the dredging of the Demerara Ship Channel?” Stabroek News, July 8, 2022. See also Zoë Deceuninck, “Jan De Nul bouwt omstreden haventerminal voor oliewinning in Guyana [Jan De Nul is building a controversial port terminal for oil extraction in Guyana],” Apache, May 12, 2023. See also “Vreed-en-Hoop shorebase: Artificial island comes into view,” News Room, Jan. 3, 2023.
  21. Zena Henry, “Fishermen fear more harm to industry,” Kaieteur News, July 10, 2022. See also “Dredging and the fishermen,” Stabroek News, Aug. 8, 2022. See also Laurel Sutherland, “Dozens of fishers said to be affected by dredging of Demerara River mouth,” Stabroek News, Aug. 5, 2022.
  22. “President Ali inspects ongoing construction of Guyana’s first artificial island,” Department of Public Information, Feb. 27, 2023.
  23. “No approved, charted fishing grounds exist in dumping area for shore base dredging – MARAD” Oil Now, Aug. 10, 2022.
  24. Ibid.
  25. “‘Extensive consultations’ held with fisherfolk prior to Demerara dredging activities – NRG Holdings,” Stabroek News, July 10, 2022.
  26. Mukesh Narine, “How will shore base be funded?” Kaieteur News, Apr. 12, 2022. See also Elijah Whitley, “The Vreed-en-Hoop shore base, funded with Guyana’s oil revenues makes it a private, public partnership,” Stabroek News, Mar. 23, 2023.
  27. Elijah Whitley, “The Vreed-en-Hoop shore base, funded with Guyana’s oil revenues makes it a private, public partnership,” Stabroek News, Mar. 23, 2023.
  28. “VEHSI shore base on track for December delivery,” Kaieteur News, Feb. 18, 2023.
  29. “Gov’t welcomes $60B ‘Port of Vreed-en-Hoop’ shorebase facility,” Department of Public Information, Apr. 22, 2022.
  30. Joel Bhagwandin, “Vreed-en-Hoop shore base is not a public-private partnership,” Stabroek News, Mar. 26, 2023.
  31. Sabrina Valle and Gram Slattery, “U.S. probing Exxon contractor in Guyana for smuggling drugs, gold,” Reuters, July 14, 2023.
  32. World Bank Group, Poverty and Shared Prosperity 2022: Correcting Course, Washington, DC, 2022, xiii.
  33. Subhana Shiwmangal, "How the cost of living is hitting people (Part 4)," Stabroek News, November 1, 2022.
  34. Clifford Krauss, “The $20 billion question for Guyana,” New York Times, July 20, 2018. See also Micah Maidenberg and Andreoni Manuela, “The country that wasn’t ready to win the lottery,” Foreign Policy, June 19, 2018. See also “Krauss’s article and insights,” Stabroek News, July 27, 2018.
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