…to give commission more independence, remove semi-autonomous status

IN the light of criticisms that the Petroleum Commission Bill makes provision for too much government control, government announced on Friday it will revisit the legislation with the aim of ensuring that it illustrates transparency and is inclusionary.

Natural Resources Minister Raphael Trotman told the National Assembly on Friday that “Government has chosen to pause the implementation of the Petroleum Commission Bill, so that we can receive all fit and proper proposals that may be out there.”
Trotman noted that “This moment will not come again and how we prepare to manage this resource, in particular, will determine the long-term future of the country; so I will recommend to Cabinet that the format is changed from the standard semi-autonomous one to make the Commission more independent and inclusive, so that it can enjoy national support.”

Since 2015, United States (U.S.) oil giant ExxonMobil announced a significant oil find in its Liza 1 well located in the Stabroek Block, which is located approximately 120 miles offshore Guyana. Since then, there have been other oil finds. In fact, Turbot 1 is the latest and fifth new oil discovery in the 6.6M acre Stabroek Block. The Stabroek Block is estimated to contain at least a ceiling of 2.75 Billion Barrels of recoverable crude oil.

That decision comes months after the parliamentary opposition, the People’s Progressive Party (PPP) said that the Bill must be properly scrutinised. Opposition Member of Parliament Irfaan Ali back in June, when the legislation was sent to the Special Select Committee of the National Assembly explained that “the independence of the Petroleum Commission is vigorously challenged in numerous sections” thereby affecting its ability to operate in a fair, open, objective, and non-discriminatory manner as envisioned in section 6 subsection 1.

Under Section 8 of the Bill, he said the power of the minister to give directions to the Commission shows that the Commission would be incapable of working without the intervention and control of the minister. He contended that under Section 8, the minister is allowed to provide policy guidance and give direction to the Commission regarding the size of the establishment, the employment of staff and the terms and conditions of employment, the provision of equipment and use of funds among other things.

As such, Ali stated that Trotman would be empowered to dictate the number of persons the Commission should employ, the terms and conditions of the employment of staff of the commission, and how the commission should use its funds.
However, Trotman had maintained that the Petroleum Commission of Guyana Bill 2017, which was sent to a Special Select Committee for bi-partisan deliberations, was the subject of extensive consultation on the legislation which provides a legal framework for regulating and monitoring of the sector.

Trotman said the legislation, which provides a legal framework for an efficient, safe, effective and environmentally responsible exploration, development and production of petroleum in Guyana, was drafted by the Oceanic and Natural Resources Advisory Commission of the Commonwealth Secretariat and then sent to the government for extensive consultations.

On Friday, he stressed too that his ministry has undergone significant institutional changes this year and it is envisioned that for 2018 the Petroleum Commission will pave the way for the Petroleum Commission of Guyana to be the fourth regulatory agency under the purview of the ministry. The three other agencies are the Guyana Geology and Mines Commission, the Guyana Forestry Commission and the Guyana Gold Board.

Green economy
“Mr. Speaker, in 2018, the Ministry of Natural Resources will continue to discharge its mandate “to develop, implement and oversee policies for the responsible utilisation, development and exploration of natural resources as part of the green economy programme”

In doing so, the ministry will focus on implementing policy and project-led initiatives under its three programmatic areas: Strategic Planning & Administration, Natural Resources Management and Petroleum Management, which will require a financial commitment of GYD$1, 110,030 to cover re-current costs and capital expenditures under these programme areas.

Additionally, he told the House that the Natural Resources Ministry has recognised that there is need for a clear legislative regime that enables improved governance and the development of a sustainable extractive sector. Following the legal reviews conducted on a number of legislative and policy instruments in the sector, they were deemed outdated and contained many loop-holes which led to revisions in 2017.

“Mr. Speaker, in 2017, the Ministry of Natural Resources updated its policies and laws relating to the conservation, management, protection and sustainable development of the nation’s patrimony, its mineral and forest resources,” said the minister, who told the House that draft Oil & Gas policies and legislative documents represent Guyana’s attempt at setting out specific policy and legislative objectives, and management measures for the exploration and potential development of upstream oil and gas resources found in the country.

Trotman noted too that government has recognised the need to improve the policy and regulatory framework by including issues such as licensing and contracting, fiscal framework, transparency and accountability, local content and environmental management. He informed the House that several pieces of legislation and policy documents are currently in draft form.

Those include: Revisions to the 1986 Petroleum Exploration & Production Act & Regulations; Oil and Gas Policy; Local Content Policy; Petroleum Commission Bill; Environmental Regulations; Health and Safety Regulations; Petroleum Taxation and Fiscal Legislation; and Sovereign Wealth Fund Bill.
In 2018, the said legislative and policy instruments will be disseminated for stakeholder consultations and then tabled in the National Assembly.

Petroleum management
In the case of Petroleum Management, a financial commitment of GY$178M is necessary to cover the ministry’s re-recurrent expenditures “to support the exploration and production of oil and gas resources by regulating, managing and monitoring the industry to ensure that the resources are developed in a sustainable manner”.

“Petroleum management rests on pillars that flow from the undergirding policy that the sector must be built on a body of implementable rules, credible institutions and the public’s trust,”Trotman stated. As a result, the Ministries of the Presidency, Finance, Public Infrastructure, Business and Natural Resources are in the process of fashioning the appropriate fiscal architecture to prepare for the revenue, establishing a regulatory authority, a multi-stakeholder committee to provide guidance and bringing order to the geological surveys and storage of data.

Additionally, the ministries will also critically examine the question of whether or not to have a national oil company, implement policies which aim to maximise benefits to the local economy, support capacity building and skills training, implement a public information campaign aimed at keeping the populace informed and engaged; develop an infrastructural and social development plan and establish a Sovereign Wealth Fund.

“Mr. Speaker, the ministry will actively be involved in the drafting of the National Oil Spill Contingency Plan, although the Civil Defence Commission (CDC) will be leading the process. Activities will range from stakeholder engagement, to risk assessment and the construction of an oil spill response storage and training facility.” Additionally, Trotman disclosed that there will be the creation of a communications system with ongoing survey vessels, drilling rigs and production facilities as a first alert system.

He said that by developing the National Contingency Plan, the nation will benefit from a structured response system with a clear communication and action plan in the event of a spill.
“The Oil Boom equipment that has been procured under the Department in 2017 will ensure Guyana is fully prepared and trained for an oil spill event. Mr. Speaker, the Government of Guyana intends to establish an On-shore Oil and Gas facility in the country, as it seeks to fully optimize opportunities in the petroleum sector.”

Several locations have since been reviewed for the establishment of the facility and this was done in collaboration with the private sector. Crab Island – Berbice was deemed a suitable location for the logistical base. “Mr. Speaker, the Government of Guyana, with support from our many partners, seeks to build the capacity of our policy-makers, officers, technicians, private sector professionals and all stakeholders on the issues and challenges surrounding this emerging sector,” the Natural Resources Minister said.