As the Guyana Government marked its third year in office on August 2, 2023, it reveled in the progress made thus far in overhauling the legislative and regulatory architecture of the oil industry. Dr. Bharrat Jagdeo, the country’s Vice President who also bears the responsibility for clarifying industry-related policies, discussed the government’s initiatives on Thursday.
During an engagement with members of the local media fraternity, he underscored the most notable accomplishments to be the enactment of the Natural Resource Fund (NRF) Law and the Local Content Law in December 2021.
Dr. Jagdeo said, “We amended the NRF which has gained international kudos because the amendments (to the 2019 version) vastly improved the transparency and accountability for the revenues received…Meanwhile, the Local Content Law has driven over US$400 million in business to locals. These are all important pieces of our framework.”
Dr. Jagdeo also noted that the government kept its promise to move away from the one-on-one negotiations for oil blocks, reminding of last year’s launch of the nation’s maiden auction featuring 14 oil concessions. Bids are expected to close for this bid round September 12.
During the three-year period, the Vice President also reminded that new model Production Sharing Agreements (PSA) were done to govern deepwater and shallow water blocks. These are still being finalised following feedback from the public. To complement this, he said there is the Petroleum Activities Bill 2023 which was tabled on Thursday.
Also of significance, he said, is the pace at which government strengthened the provisions for three production licences issued to the ExxonMobil-led consortium for the Stabroek Block. Jagdeo said there is a clear requirement for a capping stack to be held in-country and for a subscription to be maintained for another. He noted that Exxon’s projects are now subjected to a flaring fee which stands at US$50 per tonne of unsanctioned emission. The Vice President also noted that there is a US$2B affiliate company guarantee which complements the US$600M per occurrence insurance coverage for oil spills.
The Vice President added, “We have higher standards for wastewater, we are building an oil response capability as well as an inspection capability.”
At the Guyana Revenue Authority (GRA), he said efforts are in train for the ramping up of the nation’s auditing capacity for oil revenues.
Though a Petroleum Commission is yet to be established, the Vice President said there is no regulatory function that the Ministry of Natural Resources is unable to handle in the interim.
Looking ahead, the Vice President noted that authorities are channeling their energies towards building out a framework that would ensure timely inflows of production data as well as the verification of same. This, he underscored, will become even more critical as the country is expected to have six oil projects producing over 1.2 million barrels of oil per day by 2027.
