Guyana building world-class regulatory environment
Vice-President Bharrat Jagdeo
Vice-President Bharrat Jagdeo

–VP Jagdeo tells stakeholders during CERAWeek 2023 discussion

THE government’s intention is to create a world-class regulatory environment which would be consistent with the highest industry standards and encouraging for investments, Vice-President Dr Bharrat Jagdeo said during a CERAWeek 2023 discussion on Monday.

“We want to emerge as a predictable environment where our regulations dictate the highest industry standards, but they don’t become a humbug to the development of the industry. And, on the fiscal side, we want a lot of incentives remaining with people so that they can invest in Guyana so that we remain attractive, but at the same time we want a greater take for the country and the people of the country,” Jagdeo said.

Part of this process is the creation of a model Production Sharing Agreement (PSA), which would be used to guide future deals with investors.

This is being done at a time when Guyana is preparing to auction 14 oil blocks. The country is among 65 countries that will be launching auctions of oil blocks, and as such the government worked along with international consultant, IHS Markit Consulting, to offer the best terms that will see the country remaining competitive while also getting a fair deal.

“These are key fiscal conditions. We know already funds are scarce [for oil-and-gas exploration], largely because of net zero targets. It is more and more difficult to finance the oil-and-gas sector. IHS Markit assured us at this level, although they [the conditions] may seem high to some people, that we will remain very competitive,” Dr. Jagdeo had said.

He added too: “Some will believe we’re taking too much; others will complain we should have taken everything under the sun. We opted for a simple formula with fixed royalties. Some countries have variable royalty depending on internal rate of return; we did not go with that complex system. We opted for a simple system which can be understood by everyone. The fixed royalty protects against when oil prices drop.”

The new fiscal terms and other conditions will not be applicable to existing contracts. Outside of the fiscal terms, there will also be other ways in which the government will be moving forward with a stronger PSA to derive lucrative benefits from the oil-and- gas sector.

“We’re working on a model PSA and also a new legislation to update the one from 1986. So, it is not fit for purpose today and we want to ensure that even before the bid round is completed, that the potential bidders would see what the new PSA looks like,” Jagdeo said on Monday.

The Vice-President said that the government believes in stability and predictability but never a capricious government.

It was reported recently that a new petroleum production bill to update and modernise Guyana’s existing legislation in the sector is currently in the pipeline and will be made public shortly.

This was according to Attorney General and Minister of Legal Affairs Anil Nandlall S.C., during last Tuesday’s edition of his weekly show, Issues in the News.

During the live broadcast, he said that while Guyana has a Petroleum Exploration and Production Act, which was enacted in the 1980s, the government is working on a new petroleum production bill.

The previous act, Nandlall said, was enacted when the country was not a petroleum producer and since Guyana has moved successfully into that sector, the current piece of legislation has become outmoded and cannot be a proper regulatory framework for the current sector.

“We have recognised that a long time ago, and we are working on a brand-new bill that will take into account and will address the modern realities of Guyana as an oil and gas producer. So, that is in the pipeline and that will be made public shortly,” he said.

Additionally, Nandlall related that there are some other related legislations that the government is working on as it relates to the oil and gas sector, and in due time those will all be made public.

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