Transparency most critical component for Energy Sector

– contracts being made public very important – Mexican Energy Professor

If Guyana is to create an energy sector that is geared at being productive, efficient, and sustainable, then one of the most critical issues that must be taken into consideration is transparency.

This was according to Professor of Corporate Finance and Energy Investment at ITAM and CBMEX in Mexico, Jose Pablo Rinkenbach, who was at the time speaking at the recently held “Tain Talks” on Energy, Oil and Gas at the Pegasus Hotel.
The profession said his country, which has years of experience in this industry, recognises the importance of ensuring transparency in its operations.
“We experienced — and I think it is probably one of the most important things — that transparency is a critical issue. At the end, making public all the contracts becomes very, very important. It gives a lot of robust system for the Government that everything was transparent, and it protects both the Government and the companies,” he said.
He explained that another lesson which Mexico has learnt over the years, and which can be valuable to Guyana, is to focus on national development rather than “talking about national content.”
“When you talk about national content, you tend to focus only on developing factors and not on developing people; and you need to focus on educating — having better competencies and having better persons in terms of capacities. A lot of the breakthroughs that are being experienced in the oil and gas business are in Artificial Intelligence, where you make more optimization on algorithms etc — how you drill faster — and that has to do with software, with people, not with hardware. Focusing only on national content tends to have a focus on the past; you need to look at the future.”
According to Professor Rinkenach, Guyana needs to ensure that it has a very robust regulatory framework for management of the oil and gas sector, especially since a lot of focus is going to be placed on energy simultaneously.
“That means recognising that the Energy Sector needs to have three pieces. The first one is planning, the second one is regulation, and the third one is operation; and it has to be done by different agencies that have autonomy in terms of budgetary and also in terms of operations. Normally, the planning is being done by an Energy Ministry; the regulatory by an independent and technically very robust Agency, Petroleum agency or a downstream agency; And the third one is being done by the market, by the participants. Here the technical part becomes very critical, because at the end this is the agency that represents the Guyana Government and State”, the professor stated.
The Mexican Energy specialist elaborated that in terms of negotiations, the technical conversations with operations, the recurring costs, issue of right amount of royalties etc., must also be addressed with a very technically robust methodology that can come from very experienced human resources.
Additionally, he noted that information is regarded as much more important than a resource base when dealing with the Energy Sector.
“Because, at the end, the information develops at a faster pace; the development of the resources. You have to decide who has the property rights of the information? What are the rights and obligations? I mean, how the information can be accessed, shared, or delivered by the Government? What are the schemes to generate new information, etc?” (Kristen Macklingam)