Guyana must think smart and utilize the little time it has available to create a robust regulatory framework, before commercial oil production begins in 2020, advises regulatory professional and risk consultant, Peter Wilkinson.
He said based on the time remaining before oil production begins in the South American country, getting off to a good start is needed, not perfection. “Guyana doesn’t need to get through a level of perfection during that time, but it is crucial that it starts off with a solid foundation,” he told OilNOW via telephone on Wednesday.
Wilkinson is Managing Director of Noetic Risk Solutions, an Australian-based consultancy firm, where he focuses on providing strategic advice to Government, Boards and leadership teams on safety management and enterprise risk management. He has completed assignments for upstream oil and gas clients in Australia, China, UK, Malaysia, Timor Leste, New Zealand, and the US Gulf of Mexico as well as for the Australian Government on the Montara oilfield blowout.
He told OilNOW that while it is not expected for Guyana to master all it needs to do at the first instance, it is important that it is able to start off with a core set of capabilities that will allow it to function effectively in this new industry.
In this regard, Wilkinson suggested that the country considers setting up an initial legal framework, because this allows it to better understand or address any legal issues that may arise from time to time.
“New discoveries are made and it becomes sophisticated and different types of hydrocarbons are produced and therefore, the regulatory body will proportionately be made with the oil industry,” he said.
Speaking of his own experiences in the setting up of such a framework in Australia, the consultant said funding for the regulatory body in that country was largely tied to the development of the industry. He said Guyana could use the experiences of Australia as well as other countries to build a regulatory framework that stands on the principles of good governance, accountability and transparency.
Wilkinson explained that initially, “The Australian Government used its own money to set up the core systems, such as hiring key persons, opening offices, creating the legal framework, paying Government lawyers and establishing other processes. Once those were out of the way, the industry grew substantially and the price for oil went up with a large demand for liquefied natural gas from Asia, Japan, South Korea and China. As the industry grew, the regulatory system ensured that there was an amount of money coming in to help develop the system/processes to hire the people.”
Putting it into perspective, he said, “Australia, in the next two years, will start to export more Liquefied Natural Gas (LNG) than any other country in the world, including Qatar.”
Japan is the world’s largest importer of LNG – importing nearly one third of all global supplies and it relies on stable and trustworthy supplies of LNG.
He said the Australian Oil and Gas industry was small, when it started, but with right Government investment and a strong regulatory framework, it has grown to one that is being modeled by other countries in the world.