The Guyana Government has announced a revision of the way it conducts business with Oil and Gas Exploration Companies, through its use of Production Sharing Agreements (PSA).
The announcement was made on Monday as Minister of Finance, Winston Jordan, presented his Budget for 2018 under the theme “the Road to a Good Life Continues,” in the National Assembly, Georgetown.
The Finance Minister in providing an overview of the sector, recalled that the ‘world class’ discoveries by US Oil Giant ExxonMobil has in fact de-risked the Guyana basin and as such there is now greater interest in the unallocated offshore blocks.
According to Mr. Jordan, “it is imperative that we safeguard the rights of our nation to a fair share of resource wealth…To do so, we must revise the existing template of the Production Sharing Agreement to be more accommodating to changing commodity prices while maintaining a level of progressivity that is responsive to profitability.”
The Finance Minister used the occasion to announce too that an oil and gas unit will also be established within the Guyana Revenue Authority (GRA).
That unit, he said, “will benefit from extensive training in revenue administration within the context of PSAs.”
According to the Finance Minister, “the prudent management of these revenues, in addition to a well-thought out development plan, will help to guard against the resource curse.”
He was adamant, “while we strengthen our ability to negotiate more equitable PSAs, key Government agencies within the recently established Inter-Ministerial Technical Committee on petroleum will continue to coordinate capacity building and interactions with the industry.”
According to Mr. Jordan, the committee‘s agenda in the immediate future will focus on coordinating capacity building, information sharing, as well as providing input into the development of a legal and institutional framework to support the sovereign wealth fund (SWF).
He said the development of a rules-based SWF is critical to ensuring that “our resource revenues are responsibly managed within a transparent framework that promotes the highest levels of accountability.”
He cautioned however “it must be noted that the SWF will not just serve for investment, but also to save for future generations and to stabilize the economy in times of global economic instability.”
Mr. Jordan as such informed that during next year Government will be publishing a green paper to apprise the House on the proposal for the SWF and to “seek feedback for further refinement, and to stimulate a national discussion to ensure that all citizens understand the benefits to be had and the perils we must guard against in the collection and management of our oil resources.”
He recalled too that in addition to the establishment of the SWF, in 2018, the Petroleum Commission will be operationalized after the anticipated passage of the Petroleum Commission Bill.
That Commission will be tasked with the monitoring and regulation of this new and emerging sector, with a mandate to ensure that the exploration, development and production of petroleum are done in an efficient, safe, effective and environmentally responsible manner.
“While we continue to build capacity for effectively managing and regulating the oil and gas sector, we will ensure that systems and regulations are in place to properly and transparently account for, and manage oil revenues,” he said.