GCCI laments Govt’s sloth in preparing to regulate oil & gas
…urges urgent setup of petroleum commission, regulatory framework
Reports about disproportionate agreements with oil companies have prompted the Georgetown Chamber of Commerce and Industry (GCCI) to reiterate calls for the government to set up an adequate regulatory environment for the oil and gas industry.
Making this call was GCCI President Nicholas Boyer, who on Monday spoke during a press conference at the British High Commissioner’s residence. According to Boyer, the chamber has called time and time again for the government to speed up preparations for first oil.
Boyer has reiterated these calls in the wake of reports claiming that British oil firm Tullow, which recently found oil in the Orinduik block, will be recovering its one per cent royalty payment to Guyana as cost oil.
“We need to set up our regulatory bodies for the oil industry. Until we set up a petroleum commission and as part of that commission you have a local content committee and whatever other parts you need to regulate it, insulate that from too much political control, until you do that, if you notice with the Exxon and Tullow contracts, there are very varying terms.”
“So we need to move management of our oil industry out of direct control of political actors, insulate it and make it transparent. And when its transparent, I think you’ll see more of a harmonization. We need to activate a petroleum commission and even if we don’t staff it with the best, we can always contract them on an as needed basis.”
Boyer noted the benefits of contracting the skillsets needed such as petroleum lawyers and engineers, investment bankers and energy consultants, they can do studies on international standards for Production Sharing Agreements (PSA), review what Guyana has in place and advise appropriately.
“And then they can highlight the risks and rewards, to us, for putting certain terms in, taking certain terms out and where we fall on a world comparison. And then, transparency would allow everybody to add their own judgement,” Boyer added.
Meanwhile, British High Commissioner Gregory Quinn noted that notwithstanding the criticism, Tullow’s role is still a vital one. When it comes to the terms of the contract, however, the diplomat left that to Tullow and the Government to discuss.
“The Tullow Oil find is good for Guyana for two simple reasons. One, it demonstrates that there is oil outside of the Exxon Block. So it isn’t just about Stabroek, its bigger than that. Secondly, it brings in a whole new set of companies, countries and operators.”
Recently, it was announced that the Department of Energy would be hiring an international firm to do, among other things, a needs assessment for the petroleum commission. Department of Energy Director Mark Bynoe has said that the commission will be based on “ best practices.”
Another matter that came up was the Natural Resources Fund, which will save the revenues earned from oil and gas. Recently, Finance Minister Winston Jordan had complained that the Private Sector Commission (PSC) was yet to respond to an invitation to submit nominees to the NRF oversight committee. Boyer stressed, however, that the non-response was because of a change over in management.
“The letter got caught during a change over. And they are responding to the Minister,” Boyer explained. “That I know for sure, because we are a sectoral member of the Private Sector Commission.”
It was only in June that Chief Executive Officer (CEO) of Roraima Group of Companies and aviator, retired Captain Gerry Gouveia, was elected as Chairman of the PSC. He replaced Desmond Sears at the commission’s 27th Annual General meeting.
When it comes to the NRF oversight committee, the Parliamentary Opposition has since refused to submit a nominee given the government’s current caretaker status. In fact, Opposition Leader Bharrat Jagdeo made it clear that the Natural Resources Fund Bill will be reviewed by a People’s Progressive Party (PPP) Government.