OVER the past few months, the government has been working to update Guyana’s oil and gas regulatory framework. Right now, the focus is on updating the Petroleum Commission Bill and the operating rules for the Petroleum Commission of Guyana by the end of this year.
The Petroleum Commission will act as an overarching regulatory agency to manage, regulate and monitor Guyana’s growing petroleum industry. It will operate autonomously, to help insulate it from political shifts and pressure, and share responsibility with the Guyana Revenue Authority.
With promising new discoveries, 9 billion barrels of oil equivalent in recoverable reserves, and nearly US$350 million in the Natural Resources Fund, it is vitally important that Guyana have a stable and capable regulatory system in place to avoid pitfalls of resource development.
Regulatory oversight of the oil and gas sector includes permitting, safety rules and inspections, environmental impact assessments, and monitoring of operations and production—all of which require specialised professionals who understand the industry.
Stability, accountability, and apolitical decision-making are central to that. Countries that have a system that checks all three boxes, like Norway, have avoided the resource curse. Norway’s regulatory system is intended to be insulated from political party changes and patronage and is staffed with subject matter experts hired based on merit, not connections. It is composed of laws and regulations that are clear, stable, and made in consultation with all stakeholders.
The shared financial responsibility structure between the Petroleum Commission and the Revenue Authority could help clarify separate responsibilities for the governing bodies that will help avoid common resource curse pitfalls. While the Commission will be responsible for the collection of fees, fines, and other charges within the oil and gas industry, the Guyana Revenue Authority will collect all oil production revenues, including royalties and proceeds. This separation aims to boost transparency.
While the Commission will take on new responsibilities, it will also be the new home for departments that currently help regulate the oil industry. Existing agencies like the Petroleum Department at the Guyana Geology and Mines Commission will be reclassified under the Petroleum Commission, which will still be housed under the Ministry of Natural Resources. This consolidation will ensure that all oil and gas management stems from the same agency, streamlining regulations and making the overall system more consistent.
The Petroleum Commission of Guyana Bill is currently being revised by the Attorney General’s Office and is expected to be re-tabled in Parliament by the end of 2021, according to Minister of Natural Resources, Vickram Bharrat. The Bill must then be debated before being passed, after which the government can begin to set up the Petroleum Commission. This may not happen until early next year, but Minister Bharrat has stated, “Guyana can look forward to having a fully functional Petroleum Commission Bill in place by the end of the year.” As we move into the second half of 2021, it will be important that the government work quickly to meet these goals without jeopardising key regulatory matters already underway like approvals and permitting.
Establishing transparent and accountable institutions that are insulated from political shifts are part of ensuring that new policies and systems align with international best practices. Many elements of a transparent and accountable system are already in place or in progress, but it’s important that they rapidly gain experience and grow their capabilities to match the speed of oil development.
As the oil and gas industry grows to rival the largest producers in the region, it will be even more important that Guyana’s regulatory systems are stable and capable. Guyana has the opportunity to become an even more attractive investment destination if it continues to take the right steps to strengthen its regulatory institutions.