Guyana has no independent oil sector regulator; transparency law continues to be defanged – Ram
By Kiana Wilburg / Kaieteur News
Petroleumworld 10 01 2021
Six years after the discovery of oil, Guyana remains without the legislative and regulatory framework essential to protect the oil industry against mismanagement and corruption. One of the key regulatory pieces that remain in limbo is the passage of the Petroleum Commission Bill that would pave the way for the appointment of an independent regulator.
Chartered Accountant and Attorney-at-Law, Christopher Ram, recently pointed to the importance of this crucial regulator while bemoaning the seeming unwillingness of the current government to get the ball rolling on this matter.
In a brief note to Kaieteur News recently, Ram said, “The Government seems unwilling to set up an independent Petroleum Commission and thereby remove the possibility of further secret deals and collusion between the politicians and the oil companies. One must not forget that the oil companies played along with (former Natural Resources Minister) Raphael Trotman in hiding from the public the so-called (US$18M) signing bonus and the 2016 (Stabroek Block) Production Sharing Agreement.”
Ram is of the firm conviction that this state of affairs, along with the absence of critical reports on ExxonMobil’s local content performance and its production offshore, do not auger well for transparency and accountability as promised by the Ali administration. He was keen to note as well, his disappointment in fact that the nation’s Access to Information Act has been defanged while adding that it is not taken seriously by the Government or the public. “Moreover, with ExxonMobil’s subsidiary, Esso Exploration and Production Guyana Limited, Hess Corporation and CNOOC Petroleum Limited operating as a monopoly, there is no incentive for the oil companies to enjoy a social licence or popular legitimacy. The Guyanese public do not factor into their equation,” expressed Ram who reiterated his call for Guyana to urgently have its Petroleum Commission in place.
Earlier this year, Attorney General and Minister of Legal Affairs, Anil Nandlall, had said that the Bill is under active consideration by the Legal Department of the Natural Resources Ministry.
“That Department is working closely with the Chief Parliamentary Counsel attached to the Attorney General Chambers and I know that the changes that we would like to see in the bill are being looked at right now, and examined with a view of incorporating them,” he stated as noted in an OilNOW article published January 8, 2021.
Last year, Guyana received a US$34M loan from the Inter-American Development Bank (IDB), a portion of which was dedicated to fast tracking activities related to the speedy passage of the Bill and its implementation. The PPP/C Government has provided no update on the status of this loan and its use to date.
NEW BILL NEEDED
In December 2020, the IDB had released a brief pointing out the glaring loopholes in Guyana’s legislative framework which essentially weakens the shield of protection that is needed for the oil sector.
According to the Bank, the Petroleum Exploration and Production Act and the Petroleum Commission Bill, in their current state, do not contain any clauses that guarantee the independence of any regulator that is appointed for the sector nor do they ensure adherence to industry norms.
The financial institution said that a new Petroleum Commission Bill is urgently needed to address these gaps that avoid or reduce control over technical and procedural aspects of the regulator. Expounding further, the IDB had said that the current Petroleum Commission Bill leaves the Commission at the behest of the Minister of Natural Resources or in strictly an advisory or supporting role to the Minister of Natural Resources and the Cabinet.
The Bank pointed out that this situation impacts the approval, amendment, and rejection of information submitted by international oil companies for petroleum prospecting and production licences; preparation and management of bid rounds for licence grants; and approval, amendment and rejection of petroleum operators’ budgets, work programmes, field development plans, production forecasts and decommissioning plans.
In addition, the Bank said that the current Petroleum Commission Bill does not assign to the Petroleum Commission functions such as receiving and fully processing applications for petroleum prospecting and production licences and proposals for Petroleum Agreements, and negotiating Petroleum Agreements, or preparing model contracts for the petroleum sector.
The financial institution said it is important to attain the required level of independence and fiscal autonomy for the Petroleum Commission that can be achieved through a new bill. It also noted that a review of the old petroleum law is necessary to protect the industry as well.
Since the emergence of the oil and gas sector, the IDB has been one of Guyana’s key development partners, especially as it relates to strengthening its capacity to govern effectively.
Towards this end, the IDB has approved a Policy-Based Loan (PBL) labelled Strengthening the Energy Sector (4698/BL-GY) for US$11.64 million in 2018; and technical assistance programmes, including four under execution: Guyana’s Emerging Oil and Gas Sector: Getting Institutions Right (ATN/OC-16532-GY) for US$580,000 in 2017; Strengthening the Capacity of the Department of Energy (ATN/OC-17100-GY) for US$1 million in 2018; Strategic Communications and Knowledge Sharing Support for Guyana’s Oil & Gas Sector (ATN/OC-17165-GY) for US$582,682 in 2018; and Strengthening the Technical Functions of the Department of Energy (ATN/OC 17844-GY) for US$606,062 in 2019.
The Bank’s support follows the immediate need of building an entirely new oil and gas regime which requires the strengthening of the nation’s governance framework in order to streamline planning interventions, regulatory reforms, and the general needs of an evolving sector. The design of this operation considered lessons learned from IDB-financed operations, including the importance of close collaboration and coordination with other agencies geared towards building the capacity of the government to manage the sector.