Namibia, other countries approaching Guyana to learn from oil sector – VP

…interested in how Guyana set up NRF, Local Content framework

The rapidity with which Guyana has developed a regulatory framework for its oil and gas sector continues to attract much interest in the world, including from countries that are now embarking on improving the regulatory framework of their own oil and gas sectors.
During a recent press conference, Vice President Bharrat Jagdeo explained that Guyana has been sharing its technical and policy experiences with countries that have approached, seeking to learn, including countries such as Namibia, a country on the South Western coast of Africa with estimated oil reserves of 11 billion barrels.

“We’ve had approaches from a number of places. Namibia. A lot of people are interested in, first of all the pace at which we are developing here. And we have been sharing with them our experience, so that the Government doesn’t become a humbug to the pace of development but at the same time ensuring that all the regulatory issues are dealt with to international standards,” Jagdeo explained.
According to Jagdeo, these countries all have one thing in common… their concern that if they do not set up a regulatory framework as early as possible, it could cost them dearly in the long run.

He made mention of Suriname, which recently ringfenced its first oil development at Block 58. The former A Partnership for National Unity/Alliance For Change (APNU/AFC) Government has been heavily criticised for not ringfencing Guyana’s own first oil production in the Stabroek Block.
Oil had already been found by ExxonMobil, when the former Government signed the 2016 Production Sharing Agreement (PSA) and failed to include ring-fencing provisions, with an eye to the future. Jagdeo noted that Suriname is merely trying to stay ahead of the curve.
“If they don’t, they’re going to come in with a first FPSO, years from now. If you don’t get in very early, you may miss the bus. And Suriname is on the verge of missing the bus, given what is happening. So, we’re happy Suriname is moving forward. We believe if there is an oil industry in Suriname and it has extra gas, there’s possibilities of working together. Maybe some common infrastructure. But they’re still a long way off from producing oil.”
“But I think that is why people are interested in Guyana, because they’ve seen our experience at putting in place a proper regulatory framework. And I’ve explained before how we have amended the licences. If you compare the early licences to the ones now, you’ll see the qualitative difference,” Jagdeo explained.
The Vice President further noted that countries are particularly interested in the way Guyana has implemented its Natural Resource Fund (NRF) and its Local Content Policy, even though sections of the latter was modelled from Ghana’s policy.
“Some countries are now coming to ask us how, because we took a staged approach to get it early. They’re asking us a lot about our experience… the Petroleum Activities Bill. So, I think they’re very interested,” Jagdeo explained.
Since the People’s Progressive Party/Civic (PPP/C) came to office in 2020, they have introduced a number of new regulatory policies and laws pertaining to the oil and gas sector… including the National Resource Fund Bill and the establishment of the Natural Resource Fund Board, Local Content Legislation, the new model Production Sharing Agreement (PSA), a new Petroleum Activities Bill, and the strengthening of the Environmental Protection Agency Permits.
In 2022, the Government passed the National Resource Fund Bill and established the Natural Resource Fund Board – which has oversight on the country’s oil monies. The Government has also updated the 1986 Petroleum Act and passed the Petroleum Activities Bill. This piece of legislation aims to improve existing laws governing safety, emergency responses, and other oil and gas-related issues.
Government has also updated the PSA, which will ultimately see the State’s take rising to over 60 percent of the current revenue share. Under the new conditions of the model PSA, Guyana stands to benefit from as high as US$20 million signature bonuses for the deep-water blocks and US$10 million for the shallow-water blocks.
Additionally, all future PSAs would also include the retention of the 50-50 profit-sharing after cost recovery; the increase of the royalty from a mere two percent to a fixed rate of 10 percent; the imposition of a 10 percent corporate tax, and the lowering of the cost recovery ceiling to 65 percent, from 75 percent.
Government has also pushed to have in place, local content legislation, which paved the way for the establishment of the Local Content Secretariat, which has been in operation for over a year now. (G3)