Oil and gas sector
As multinational oil companies gear up to capitalise on some of the largest oil finds ever, the Government is looking to have a strong legislative framework to guide the sector, which follows the billions of barrels expected to be pumped out by US oil giant ExxonMobil and Canada-based company, Eco Atlantic. This was posited by Head of the Ministry of the Presidency’s Energy Department, Dr Mark Bynoe at a press conference late last week.
“The Department is reviewing the current legal and regulatory framework for the petroleum sector inclusive of the 1986 Petroleum Act to shape proposal for revision and possible replacement of some existing legislation,” he noted.
The Petroleum Act, among its many stipulations, speaks to licensing, cancellation of blocks and to the conditions subject to which the licence is granted. Although the Government is looking to negotiate with new oil and gas investors from the latter part of next year, questions are, however, surfacing over Guyana’s lack of sound tax avoidance legislation. As such, Energy Department Oil & Gas Advisor Matthew Wilks gave all assurances that the matter would be looked into with the aim of reviewing legislation. At the same time, members of the media were told the Department wanted more support for its collaborative work with sister agencies, including the Guyana Revenue Authority (GRA).
“Yes, because if you’re looking to increase and protect State revenues going forward in new licences; you have to look at surrounding legislation and that includes fiscal legislation and tax schemes, so that will be an area of focus,” the Government Advisor outlined.
Apart from tax avoidance schemes, the Department indicated that it would have to consider a depletion policy to guide how the country deals with the reduction of oil over time. It has been recommended that a depletion policy be implemented after the commencement of oil production.
A depletion policy is found in many oil-exporting countries, since reserves in oil wells and oil fields reduce over time as in the case of regional neighbour Trinidad and Tobago’s current situation.
Dr Bynoe has already disclosed that a white paper on a Local Content Policy would be presented to the National Assembly for debate, saying that the final policy would be ready by 2020. Business Minister Dominic Gaskin has said a “too strongly national” local content policy could jeopardise the efficiency or the viability of the company being relied on to extract the resource.
The draft Local Content Framework document outlines the opportunities that may arise and the approaches to be taken in selecting and developing opportunities related to enhancing the capabilities of Guyanese nationals and businesses through training and well-tailored social contributions for greater impact and benefits among others.
The draft Local Content Policy has, however, been criticised for lacking provisions, which would safeguard against exploitation by companies.
It had been reported that the document does not cater for issues such as how to avoid procurement fraud, conflict of interest and favouritism, among others.
