Crucial aspects of Guyana’s oil & gas development on back burner as election impasse drags on

Must Read

Tankers lifting Liza Crude required to comply with Guyana’s pandemic measures

New oil producer Guyana continues to take precautionary measures at offshore installations in response to the global...

Saipem Guyana operations supported by 80 percent local workforce – Managing Director

Since starting operations in Guyana in May 2018, Italian multinational oilfield services company Saipem has established a...

E&P companies took up combined debt of $72 billion in Q2 2020 – EIA analysis

The United States Energy Information Administration (EIA) said its latest analysis has found that debt levels among...
OilNOW
OilNow is an online-based Information and Resource Centre which serves to complement the work of all stakeholders in the oil and gas sector in Guyana.

The South American country of Guyana entered 2020 with great expectations for a bright future as oil production got underway last December and an upgrade in the offshore Stabroek Block resource estimate was announced in January along with the record 16th discovery. But this hope of prosperity is now overshadowed by a more than 4-month long election impasse that is serving to distract from key work that still needs to be done for the establishment of an effective oil and gas framework.

Management of oil revenue

While the Natural Resources Fund (NRF) has been established and an account is currently being held at the Federal Reserve Bank of New York with close to US$95 million, key elements of the fund are not yet operational, such as the Public Accountability Oversight Committee. This Committee is responsible for, among other things, monitoring and evaluating the compliance of the government with the NRF Act and ensuring that the fund is managed in a transparent manner.

Operationalisation of wealth fund vital when oil production begins – Global Data Analyst

The absence of Parliamentary oversight also means withdrawals are stalled, even as Guyana needs vital resources to tackle COVID-19 and bring relief to its population. The National Assembly last sat on May 23, 2019, well over a year ago and Parliament was dissolved on December 30, 2019 to facilitate the March 2, 2020 elections.

Under sanctions oil money could be frozen – Sir Ronald Sanders

Transparency initiatives

The delay in the start of the next session of Parliament is also affecting contract approval for the hiring of an Independent Administrator who will play a key role in compiling Guyana’s second report for submission to the International Secretariat of the Extractive Industries Transparency Initiative (EITI). Guyana’s first report was submitted to the International Secretariat on April 25, 2019.

Project approvals

The absence of a fully functional government continues to delay oil development project approvals which analysts say could eventually cost the country hundreds of millions of dollars.

Back in February, Guyana’s Department of Energy (DE) had said review of the Payara Development Project is progressing well with approval likely to come after the elections. This has now been delayed by several months and without a clear resolution to the impasse in sight, the rising uncertainty will be of growing concern to ExxonMobil and the Stabroek Block co-venturers.

Marketing of Liza Crude

Nineteen companies have been shortlisted for consideration to market Guyana’s Liza Crude after a contract was initially granted to Shell Western Supply and Trading Limited to lift the country’s first three cargoes.

While the DE has said a five-member Evaluation Committee was formed to examine these companies and make a determination on who will be contracted, Guyana’s opposition party has warned both the government and contractors about entering agreements at this time.

Should the elections body declare the opposition the winner based on results from a national recount of the ballots, that party will form the next government. It is likely to review agreements entered by the current administration, particularly those made in the lead up to and after the March 2 elections.

Award of new blocks

The development of updated petroleum legislation and the establishment of a new model Production Sharing Agreement have delayed the award of new oil blocks. Moving this process forward to conclusion will also require a fully functional government and Parliament in place.

Norway-based Rystad Energy has said from a long-term perspective, delays in the award of new blocks could be the biggest detriment to Guyana because there is a window of time in the next several years where investors will still be very interested to come to Guyana and the country should capitalize on this.

- Advertisement -

Latest News

Tankers lifting Liza Crude required to comply with Guyana’s pandemic measures

New oil producer Guyana continues to take precautionary measures at offshore installations in response to the global...

Be patient: Oil does not disappear – Strengthen institutions for Guyana’s growth

The privatisation in an economy can set in motion a vicious circle. Even without corruption, rapid privatisation means that governments receive less...

Saipem Guyana operations supported by 80 percent local workforce – Managing Director

Since starting operations in Guyana in May 2018, Italian multinational oilfield services company Saipem has established a country office with 80 percent...

E&P companies took up combined debt of $72 billion in Q2 2020 – EIA analysis

The United States Energy Information Administration (EIA) said its latest analysis has found that debt levels among Exploration and Production (E&P) companies...

Costly effects of pandemic make Paris Agreement 2050 targets unlikely – Wood Mackenzie

In light of the fact that nearly US$20 trillion or 25% of global Gross Domestic Product (GDP), is earmarked for responding to...

More Articles Like This