Petroleum Commission: Strong oil management framework can operate in absence – VP

As criticisms continue in some quarters regarding the non-operationalisation of a Petroleum Commission in Guyana, Vice President Bharrat Jagdeo has explained that the country already has a strong management framework in place for the oil and gas sector which can perform effectively in the absence of a commission.
Time and again, Government has said that it wants to establish a Petroleum Commission made up of persons with technical knowledge of the industry, as an added layer of management between the regulation of the sector and politicians.
To date, however, it is yet to be operationalised and according to President Dr Irfaan Ali last week, there is a lot of complexity involved in the process. No timeline, however, was given for the setting up of the commission – triggering criticisms in some quarters.
But Jagdeo, during a press conference on Thursday, explained that there is already in place, a strong management framework for the oil and gas sector which is performing well as the Government works towards setting up the Commission.
“A Commission is not necessarily the governance structure…the Petroleum Commission, some countries don’t have Petroleum Commission. We made a commitment that sometime in the future, we will put in place a Petroleum Commission. For the countries that don’t have Petroleum Commissions and have oil and gas, they still have management frameworks in place and we have a clear management framework in place that will operate in the absence of a Petroleum Commission which will in the future, we will put in place,” the Vice President outlined.
He had previously argued too that having a Petroleum Commission is not a “safeguard against corruption” as there are countries “with the worse corruption track records” that have Petroleum Commissions.
Meanwhile, at his press conference, Jagdeo reminded of the various systems already in place that are contributing to good governance of the oil and gas sector, referencing the National Resource Fund Bill and the establishment of the Natural Resource Fund Board, Local Content Legislation, the new Production Sharing Agreement (PSA), the Petroleum Activities Bill, and the strengthening of the Environmental Protection Agency Permits.
“We have a structure for managing the sector and we’ve done well in this regard,” the Vice President expressed.
Since taking office in 2020, the Government has passed the National Resource Fund Bill and established the Natural Resource Fund Board – which has oversight on the country’s oil monies. In keeping with his powers under the Natural Resource Fund (NRF) Act 2021, President Ali had appointed five persons to the NRF Board, including Major General (Retired) Joe Singh, who is the chair.
The Government has also updated the 1986 Petroleum Act with the draft Petroleum Activities Bill which is slated to be tabled in the National Assembly soon. 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 Production Sharing Agreement (PSA), which will ultimately see the State’s take rising to over 60 per cent 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 per cent to a fixed rate of 10 per cent; the imposition of a 10 per cent corporate tax, and the lowering of the cost recovery ceiling to 65 per cent, from 75 per cent.
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.
Meanwhile, the Petroleum Commission Bill was initially tabled back in 2017 by the then Natural Resources Minister Raphael Trotman during the 11th Parliament. It was to be taken to a Special Select Committee at a later sitting after its second reading. However, it was yet to be passed when the current Government took office.
After taking office in August 2020, the new Government embarked on an initiative to make several amendments to the Bill.
The Bill is yet to be re-tabled in the National Assembly. (G11)