…attorney general tells workshop 

THE Government of Guyana understands that effective oil and gas legislation is needed as the country heads into ‘first oil’ and a “master plan” for the legislative drafting process has been recommended.

It was explained in detail by Attorney General and Minister of Legal Affairs, Basil Williams, on Wednesday at the hosting of a Petroleum Sector Legislative Reform Legal Review Workshop. The workshop was held at the Grand Coastal Inn, East Coast Demerara.

Williams stated during a presentation that with ‘first oil’ expected for Guyana in early 2020, the country must implement the necessary legislative mechanisms which will effectively meet the needs of the emerging industry. He noted that the petroleum sector will require a carefully drafted regulatory framework which guarantees both sustainable economic development for Guyana and incentives to investors.

Such a system will ensure transparency and accountability and contribute to good governance in general. “Legislation will have to address a myriad of issues and canvass several government agencies as the petroleum sector will have a cascading effect on the other sectors. For example, drilling oil wells means increased threats to the environment; we can all remember the BP oil spills and its effect on the environment. The possibility of these accidents occurring demonstrates the need of having a framework for not only managing the petroleum and gas sector, but all of the foreseeable offshore oil and gas activities,” Williams said.

Granting licences

Other areas he highlighted for consideration while drafting legislation were the procedure for awarding and granting permits and licences, ownership of resources, local content, dispute settlement, fiscal, royalty and taxation principles and more.

Guyana’s existing legislative framework, including draft legislation, include the Petroleum Act, Cap 92:01 (1930) which works to regulate the importation, sale and storage of petroleum; the Petroleum (Exploration and Production) Act, Cap 65:04 (1986) which deals with the regulation for prospecting of and Production Of Petroleum and Licensing (PPL) and the Petroleum (Production) Act, Cap 65:05 (1939) which vests in the state the property in petroleum and natural gas within Guyana.

Meanwhile, several regulations were made under these legislations which include Petroleum Regulations (1930), the Petroleum (Exploration and Production) Regulations (1986) and Petroleum (Prospecting and Winning) Regulations (1967). Ancillary legislation comprises of legislation relating to revenue, tax and customs; environmental protection; maritime and Occupational Safety and Health (OSH).
Recently, the Government passed the Natural Resource Fund Act, 12 of 2019 which establishes a fund to manage Guyana’s natural resource wealth while the Petroleum Commission Bill is within the Special Select Committee.

“Based on our existing laws and the fact that they were enacted at least over 30 years ago, it is clear that there are regulatory gaps. Much has taken place in the oil and gas sector since our last enactment and the world has changed,” the Legal Affairs Minister indicated. “Therefore, our laws must reflect international standards and moreover must ensure that our natural resources are protected.”

He reminded that the Department of Energy through a project funded by the World Bank will be hiring a firm to work with the AG’s Chambers in the drafting of legislation covering matters related to oil and gas, maritime, customs, environmental issues and OSH.

Williams stressed that in order for involved stakeholders to develop legislation and a legal framework inclusive of contracts, there must be a “master plan for the oil and gas sector.” This, he explained, would include a review of existing petroleum policies, laws, regulatory and institutional frameworks catering for upstream, midstream and downstream activities; the evaluation of the suitability of appropriateness these and the identification of provisions that hinder the attraction of investments and the negotiation of good contracts within these existing policies, laws, institutions and regulations.

The AG stated that the master plan must also include the implementation of international instruments and the participation of citizens through consultations.

“Once effective stocktaking is done, then drafting can commence by the Drafting Division of the Attorney General’s Chambers. Proper drafting instructions will have to be prepared based on the government’s policy objective. These instructions are sanctioned by the Cabinet and then sent to my office,” he stated.

Telling more about the process, he explained that the instructions received are then sent to the chief parliamentary counsel (CPC) and once the draft is completed, consultation will begin. These consultations will be used to improve the draft, after which the draft bill will be presented to Cabinet for consideration and the process for laying the Bill in Parliament will be followed before passing into law. “I wish to reiterate that drafting proper legislation is the first step. Effective regulation is needed if we are to benefit from this emerging sector. A long-term, sustainable legal framework will increase the likelihood that the citizens of Guyana will benefit,” the AG said.