Regulators should be politically and financially independent says head of Mexico’s ASEA

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Executive Director of Mexico’s National Agency for Industrial Safety and Environmental Protection of the Hydrocarbons Sector, Carlos De Regules Ruiz Funes says Guyana has the unique ability of “getting it right from the start” but key to this is the independence of oil and gas regulators.

The National Agency for Industrial Safety and Environmental Protection of the Hydrocarbon Sector, better known as Agency for Safety, Energy and Environment (ASEA), is a decentralized administrative body of the Secretariat for Environment and Natural Resources in Mexico. It has technical and administrative autonomy and is responsible for regulating and supervising industrial and operational safety and environmental protection in the hydrocarbon sector.

The Executive Director, speaking to OilNOW on the sidelines of the 27th Institute of Americas Energy Conference in San Diego, California, was making reference to Guyana’s emerging oil and gas sector and the vast potential it possesses.

“The country is going to move from being dependent on certain economic activities and is going to become a regional oil and gas hub; a very important country for oil and gas in the region and Guyana has a possibility to make it right from the start, because you have a clean sheet of paper,” he pointed out.

However, Funes noted that, “Before achieving full scale development of the oil and gas resources, the country has the opportunity to create the institutional and regulatory framework that will encompass the new oil and gas development.”

Guyana’s key regulator in the oil and gas sector will be the soon to be established Petroleum Commission which will be tasked with promoting the policies of the government in the exploration, development and production of petroleum and will advise the Minister of Natural Resources on all key matters relating to the sector. It will make recommendations on applications for petroleum prospecting and production licenses, and manage bid rounds.

Stakeholders in Guyana have pointed out that the proposed bill for the establishment of this commission places ultimate authority in the person of the Minister of Natural Resources and have called for this to be changed.

This is in keeping with Funes’ view of the vital role independence plays in the operations of regulatory bodies. “You want regulators who are defining the rules of the game for the long run and you want them to be independent from the political cycle and as such you may want to address the question of whether the economic or environmental regulators of oil and gas in Guyana should be part of a Ministry or should be independent from the Minister, and also financial independence because you want as a regulator to be able to plan for the long-term as well.”

Commercial oil production is expected in Guyana by the first quarter of 2020 and the Executive Director believes that Guyana should have already had such regulatory mechanisms in place.

“The sooner you harness industry and you provide the rules of the game to industry, the sooner the industry will be able to make investment decisions based upon a sound regulatory framework that will bring trust and certainty for those investment decisions,” he stated.

On the other hand, he said the Government will be able to provide its citizens with the certainty they need that there are institutions to take care of their interests.

On the issue of assessing political risks, he said Guyana could also look at the experiences of other countries to shape its own regulatory framework.

He added, “The key tool in sound regulatory framework is the independence of the regulator.”

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