APNU/AFC must answer for its near criminal oil & gas record – Gov’t

– as controversies include hidden contracts & signing bonuses

The Natural Resources Ministry (MNR) on Saturday clapped back against the persistent criticism of its handling of the oil and gas sector from the Opposition A Partnership for National Unity/Alliance For Change (APNU/AFC). In its response, the ministry noted that the former regime has much to answer for its near criminal oil and gas record.
According to MNR, the former Government lurched from one controversy in its handling of the sector to the next. Among the examples cited is when the former Government signed the lopsided 2016 Production Sharing Agreement (PSA) with ExxonMobil…an agreement they would have comfortably kept secret if it weren’t for the public pressure to release it.

Nor was this the only issue APNU/AFC faced a public outcry about. “In fact, the APNU+AFC administration faced years of public outcry to institute a Local Content Act and audit ExxonMobil’s costs. These are arguably two of the most critical contract administration needs, but they were ignored. Today, Guyana’s petroleum sector is governed by a modern legal framework, improved contracts, and environmental stringency,” MNR noted.
“The PPP/C administration has made substantial progress in rectifying the governance deficiencies inherited from the APNU+AFC era. These efforts have not only stabilized the sector, but also positioned it for more sustainable and inclusive growth,” the MNR further wrote, adding that the PPP/C Government has continued to provide the oversight in the sector needed for broad-based economic development.
Speaking to what was discovered when the Dr. Irfaan Ali-led Government entered office, the Government noted that an audit of what APNU/AFC left for them showed a “deplorable state of affairs”, as fundamental regulatory tasks and legislation needed to oversee the oil and gas sector had languished for years. This left Guyana lagging in its ability to manage the sector, despite oil being found since 2015.

Failures

Another specific area that APNU/AFC failed in was its inability to overhaul the Petroleum Act, which was 34 years old by the time the PPP/C reassumed office in 2020. Added to this was the former Government’s failure to get the Gas-to-Energy project off the ground, despite the steadily increasing demand for energy at the national level.
“The Petroleum Activities Act was passed in August 2023, positioning Guyana on the path of responsible, transparent and modern petroleum management. Contracts (have already been) awarded for the Gas-to-Energy project with significant works already underway. The project will slash energy costs by 50 per cent while delivering clean and reliable energy by 2025,” the MNR said, displaying what its approach has been to these issues.
Then there is the case of the US$18 million signing bonus, which was received by the APNU/AFC Government in 2016 when it signed the PSA, but not disclosed to the public by the Government until 2017, following public exposure.
“The Petroleum Activities Act clearly stipulates the instances where signature bonuses may be applied, and the process for doing so. This was enforced for the 2022 Licensing Round where the minimum signing bonuses of US$10 million for shallow water blocks and US$20 million for deepwater blocks were defined in the requisite Gazette Notice and the published Terms of Reference. These efforts further underscore this Government’s commitment to transparency and accountability,” the MNR said.
Additionally, the former Government granted the Liza Phase One Environmental Permit on the same day they received the 1500-page Environmental Impact Assessment (EIA) for the project…thus ensuring there would be no time to properly review the EIA.
“Not only does this prove they performed no review, but the permit also violated the law, as it was given a 20-year term despite the law allowing a maximum five-year term… the (PPP/C) Government has ensured that the permits were brought into compliance with the law. All permits are now subjected to a rigorous review process,” MNR explained.
Not only has MNR fixed the loopholes created by APNU/AFC, but they have also gone further in improving the sector. For instance, MNR noted that the PPP/C Government overhauled environmental permits and included provisions for a US$50 flaring fee, treatment of produced water per international standards, cradle-to-grave management of waste, having a capping stack in-country, and demanding a subscription to another.
Additionally, it introduced two modernized model PSAs, with improved fiscal terms based on industry-wide standards and best practices to govern deep and shallow water concessions. In addition to legislative reforms, the Government has sought to improve the institutional capacity of agencies such as the Guyana Geology and Mines Commission and the Local Content Secretariat. (G-3)