New ministry in the making

President David Granger addressing journalists at the Ministry of the Presidency, on Friday (Delano Williams photo)

– to deal exclusively with oil-and-gas matters

GOVERNMENT will soon establish a new ministry that will have responsibility for the oil-and-gas sector, President David Granger announced Friday during his first press conference for the year.

At the press conference held at the Ministry of the Presidency (MoTP), the Guyanese leader said, “In due course, we hope to have a ministry responsible for the petroleum sector,” while noting that the establishment of the Department of Energy is an interim measure.
He made it clear that the sector is large, and that his government is in the process of acquiring premises, recruiting personnel, as well as reviewing legislation, noting that “lots of work is to be done.”

On August 1, 2018, Dr Mark Bynoe, Environment and Resource Economist and former head of the Project Development and Management Unit of the Caribbean Community Climate Change Centre (CCCCC), was appointed by the Government of Guyana to head its Department of Energy(DoE).

The DoE has basically taken over the duties of the Ministry of Natural Resources’ Petroleum Unit, so all of those functions that were performed by the said unit have been moved to the Department of Energy.

The DoE will focus primarily on the country’s up-and-coming oil-and-gas sector, fall directly under the MoTP, and will receive direct guidance from President David Granger.

The move by the administration to establish a DoE follows a proposal submitted by Natural Resources Minister Raphael Trotman to have specialised attention placed on the petroleum sector, given the complexity of tasks that exist with the administering of such resources.
Earlier this year, the government announced that Trotman would hand over the oil-and-gas sector, given Cabinet’s approval for the establishment of a new department within the Ministry of the Presidency.

The Ministry of the Presidency had made it clear that the Natural Resources Minister had not been not stripped of his responsibilities in the oil-and-gas sector.

Meanwhile, on Friday, President Granger noted that his government is conscious of the international environment, its commitment, as well as the continued discovery of petroleum offshore Guyana.

“We intend to establish a world-class industry that is well regulated,” he told reporters, noting that government is in the process of recruiting experts best suited for the industry. Additionally, the head-of-state made it clear that “It will take time to recruit the high-class people; they were not in place in May 2015. We are now moving to recruit the best people worldwide.”

He said, too, that the public sector is not equipped with persons who are trained to work in the oil-and-gas industry. “We don’t have those people in [the] public service,” the President said, adding:
“There was a small petroleum sector in the Natural Resources Ministry which did not have the capacity to bear the burden of a world-class petroleum industry.”
President Granger assured the media that a lot of work is currently being done with the aim of advancing the work of the DoE.

Asked whether there is a genuine interest in auditing the US$460M pre-contract costs, President Granger made it clear that Commissioner-General of the Guyana Revenue Authority (GRA) Godfrey Statia, has indicated that his entity is ready to undertake such audits, and is continuously building capacity.

“He is training persons; recruiting persons with the talent, and I am convinced he is building capacity and he will be able to do the audit,” said the head-of-state.

In mid-August, the Kaieteur News reported that the GRA has already requested information pertinent to pre-contracts from US oil giant, ExxonMobil. “We don’t have to be approached; we have already asked Exxon for information regarding the pre-contracts. They have so far been compliant in supplying information we have asked for…So you can say that the process to audit has already been initiated by us,” Statia was quoted as saying in an August 19, 2018 report published by the Kaieteur News, headlined, “GRA capable of auditing US$460M pre-contract costs … ExxonMobil already approached to submit info, commissioner-general.”

President Granger said Friday that several other government agencies are building capacity to be able to adequately and effectively deal with the upcoming oil-and-gas sector.
He said that with production slated for the first quarter of 2020, “capacity-building is occurring in every area, finance, environment, natural resources… The government needs to get Guyana prepared.”

The president noted that while the process may be a bit slow, it has to be done methodically, systematically, and most importantly, properly.

Additionally, President Granger was asked whether Guyana should have had a much tougher contract, which would have seen Guyana benefiting lots more, given more oil finds offshore. On Thursday, ExxonMobil announced its ninth oil find at the Hammerhead-1 well in the Stabroek Block.

ExxonMobil said the latest discovery marks the fifth on the Stabroek Block in the past year, and proves a new play concept for potential development.

Hammerhead-1 encountered approximately 197 feet (60 metres) of high-quality, oil-bearing sandstone reservoir. The well was safely drilled to 13,862 feet (4,225 metres) depth in 3,373 feet (1,150 metres) of water. The Stena Carron drillship began drilling on July 27, 2018.

But President Granger made it clear that at the time of renegotiations in 2016, the government did what was in the country’s best interest.

“Given the circumstances at the time, I think the government did what was in the realm of possibilities. Given the situation at the time, I feel we have done the best that we could have done, given the circumstances,” said President Granger.

He said the arrangements with ExxonMobil could be reviewed by the DoE, but noted that “there is no question of removal or renegotiation of contract…we move forward and will ensure we continue to get the best advice before we move forward with any other negotiations.”