Following an intense seven-hour-long debate, Guyanese lawmakers on August 9 passed the Petroleum Activities Bill which replaces the country’s Petroleum (Exploration and Production) Act of 1986. Natural Resources Minister, Vickram Bharrat who introduced the Bill to the House, underscored its importance in bringing new dimensions of the oil sector under the government’s watchful eye.
The minister said the Bill provides significant improvement in the governance of activities related to petroleum exploration and production as well as expands the scope of the Act to include midstream activities such as the transportation and storage of hydrocarbons.
Bharrat said, “The 1986 Act speaks mostly about exploration and now we have new dimensions added. It caters to allowing the State to provide a geological storage licence for carbon dioxide. We have also added geological or geophysical survey permits.”
The parliamentarian was keen to emphasize the Bill’s importance to the Gas-to-Energy Project, noting that it will enable the smooth implementation and operationalization of the project. He said the government will be able to issue a permit to ExxonMobil to transport gas from the Stabroek Block through a pipeline and store those resources onshore. He said this was not catered for in the old law.
Additionally, Bharrat said the new law will ensure the country is able to better monetize its gas reserves. “I am not just talking about the Gas-to-Energy project but the reserves offshore in a few of the pure gas fields and in other projects (in the Stabroek Block) like Whiptail, Yellowtail and Payara. So this bill will enable us to ensure we are able to use our gas resources for transitional purposes,” the official said.
He also stressed the Bill’s significance in laying the groundwork for the country’s future with carbon capture and storage. He said this will be critical as the window for energy transition closes in.
Another critical feature he said was the Bill’s provision for the unitization of discoveries within blocks, or those that may overlap into other concessions or territories.
Further highlighting the Bill’s comprehensive contemplation of the petroleum industry, he said that it ensures there is guaranteed feedstock for refineries to be established here. In this regard, he noted that the Bill is armed with provisions that allow authorities to purchase crude from oil operators for domestic use should its share of profit oil prove inadequate. He said this ensures that no refinery becomes a stranded asset. Bharrat also stressed the importance of a refinery in Guyana as he noted that it is high time the country moves away from being an exporter of its primary products.
Bharrat said, “We cannot continue to be in a state where we are selling our cherries and oranges and importing the juice; where we are selling our logs but importing furniture. We cannot continue to sell our oil and import crude products so we have to address our minds to a refinery and have guaranteed feedstock for it so all of that is catered for in this very comprehensive Bill.”
Despite his impassioned presentation of the Bill’s critical features, Opposition Parliamentarians were not satisfied. They all contended that the Bill vests too much power in the minister. Leading the call for the Bill to be amended to include the establishment of a Petroleum Commission was Shadow Minister for Oil and Gas, David Patterson. The opposition parliamentarian argued that there is a need for a separation of undue power and influence between the government and the sector. He said a commission that is independent would serve as the ideal protective shield.
Other amendments he called for included royalty payable to the State to be a minimum of 10 percent but capped at 15 percent and that there be a requirement for full liability coverage inclusive of appropriate insurance and a parent company guarantee which shall be in force for each oil field development.
With his focus placed on an independent Petroleum Commission, Patterson said, “This law proposes to make the minister the newly appointed emperor over all things oil in this country.” He cautioned that this sets a dangerous precedent and his colleagues such as the Leader of the Alliance For Change (AFC), Kemraj Ramjattan agreed.
Ramjattan reminded that when his party, the APNU+AFC was in power, and tabled the Petroleum Commission Bill in 2017, the current administration agreed with the need for such a body. Ramjattan said the government only opposed the vesting of excessive powers in the Minister of Natural Resources, who at the time was Raphael Trotman. Ramjattan said his party heeded the advice and sent the Bill to a Special Select Committee for review. Ramjattan said it is therefore hypocritical for the administration to now introduce a Bill that assigns excessive powers to its minister.
Government Parliamentarian, Sanjeev Datadin during his contribution was keen to note that the Minister of Natural Resources would not possess absolute power over the industry. He reminded that the minister is a creature of government and would be guided by Cabinet. In any case, he believed that the Opposition’s contribution to the debate was out of context. He said, “What is before this House is a Petroleum Activities Bill, not a Petroleum Commission Bill… If you bother to read the legislation you would see that we are straying from the point. This Bill is about a framework to govern activities in the sector.”
Attorney General and Minister of Legal Affairs, Anil Nandlall echoed Datadin’s sentiments while noting that the Bill was not crafted in isolation or with any sordid directions. Nandlall said drafters consulted with several countries including the USA, the UK, Norway, Ghana, Ireland, Angola, Brazil, and Trinidad and Tobago.
“In Trinidad and Tobago, and we can argue from now until tomorrow whether they managed their oil revenues prudently or not, but no one can dispute that it has had a successful model as a production centre for 100 years. They have all the powers vested in the Minister of Energy. And for 100 years the sky did not fall,” Nandlall said.
The Attorney General further noted that it is the prerogative of the government to choose a model that reposes the powers in an elected official. He also noted that the minister will be under Cabinet’s guidance, adding that Cabinet is collectively accountable to Parliament.
Opposition Leader, Aubrey Norton still held firm on the main line proffered by his colleagues that a Commission is important.
“We are not saying the minister shouldn’t have responsibility for the sector but that doesn’t mean you cannot have a commission that is independent and one that insulates the sector from political partisanship and we need to do that,” the politician argued.
Norton pleaded with his colleagues in the government’s camp to at least lend consideration to the inclusion of such a body to provide oversight over the industry. He said the Bill offers lawmakers an opportunity to demonstrate to the public that they can indeed work together and produce a piece of legislation that protects the interest of the people on all fronts.
“We have to decide if we want total domination or a law that allows the evolution of a structure for good governance,” Norton appealed.
Despite the opposition’s best efforts, they were not able to convince the government to include their amendments. The Bill was subsequently passed as is.
Other speakers on the Bill included the Minister within the Ministry of Public Works, Deodat Indar; Minister of Labour, Joseph Hamilton; Home Affairs Minister, Robeson Benn; Culture, Youth, and Sport Minister, Charles Ramson; and Opposition Members, Deonarine Ramsaroop, Vincent Henry, Ganesh Mahipaul, Dawn Hastings- Williams.
The Bill now awaits the President’s assent to officially make the transition into law.
