…says current legal framework a hindrance to investmentsThe Extractive Industry Transparency Initiative (EITI) has recommended that with first oil approaching rapidly, the Government needs to step up its review of existing legislation dealing with the oil and gas sector.Department of Energy Head, Dr Mark BynoeThis is contained in the organisation’s first report on Guyana, which was recently released. There, it noted the need for a review of legislation such as the Petroleum and Exploration Regulations (1986), to equip Government to better regulate the sector.“The Government of Guyana is currently undertaking several reforms in the preparation for the emerging oil and gas sector such as the Petroleum Exploration and Production Bill, which will replace the current Act and Petroleum Environmental Production Pollution Control Regulations as well as the Petroleum Health and Safety Regulations, which are currently being reviewed.“The oil and gas sector in Guyana are currently in the production phase, which is expected to start in the beginning of the year 2020,” the report continues. “However, to date, the reform of the Petroleum Exploration and Production Act is still in progress.”According to the report, this state of affairs does not bode well for allowing a favourable investment environment for petroleum companies to carry out exploration and production activities.“In order to promote a favourable legal environment for investment and in a bid to boost theconfidence of private operators in the country, we recommend that the GYEITI MSG (Multi Stakeholder Group) follows up with the Department of Energy at the Ministry of the Presidency in a bid to accelerate the reform of the petroleum legislation and how to address any technical barriers delaying the process,” the report advises.A prevailing concern is that Guyana is still unprepared for the oil and gas sectorThe reviewMeanwhile, Department of Energy Head, Dr Mark Bynoe revealed at a recent press conference that they have completed a gap analysis of existing laws – an exercise that would have highlighted shortcomings in Guyana’s oil and gas-related laws, compared to industry standards.“One of the things we have in our possession at this point in time is that draft gap analysis and diagnostic review,” Dr Bynoe said. “That has to go through us speaking to other partners as well, because it doesn’t only impact the Department, it impacts a number of other departments and stakeholders.“It is because of that review you would now see us advertising for legal advisory services, because that review will point the way in terms of what needs to be repealed, what needs to be replaced and what needs to be amended and made more contextually relevant to the realities we face today.”He gave as an example primary legislation like the 1986 Exploration and Production Act. According to Dr Bynoe, the Act is silent on issues like downstream activities in the oil and gas sector.“It also requires enhancement in decommissioning and local content. So these are all areas we’ll be looking at. Once these things are put in place, we then move towards issues of [the] petroleum commission bill, that we have put in abeyance until the primary legislation is put in place,” he explained.After its 10th discovery of oil in the Stabroek Block, ExxonMobil estimated the recoverable resource in the block to be five billion oil equivalent barrels. At US$50 a barrel, that equates to well over US$200 billion.Exxon has since found oil in two other wells. In addition, an independent assessment, or competent persons report, had found that 2.9 billion barrels of oil exist in the Orinduik Block.All of this will represent a monetary windfall for Guyana, which will be saved and invested through a Natural Resources Fund.Previously, a green paper on the fund was laid in the National Assembly. Government released the draft Natural Resources Fund Bill of 2018, which had, among other things, proposed the creation of a 22-member Public Accountability and Oversight Committee that would oversee the management of the Fund and provide checks and balances. President David Granger assented to this bill on January 23.But a prevailing concern is that Guyana is still unprepared for the sector. During a Nations School of Business and Management-facilitated seminar on oil and gas in March, Attorney-at-Law Sanjeev Datadin had noted that Guyana was behind in its preparations to regulate the oil and gas sector compared to other countries.“Look at it this way,” Datadin had explained. “If we take England, England has had at least 3000 pages of legislation. That was the basics. Then they had subsidiary legislation. That was probably another 10,000. At present, we have 60 pages.”The Stabroek Block is 6.6 million acres (26,800 square kilometres). Esso Exploration and Production Guyana Limited is the operator, and holds a 45 per cent interest in the Stabroek Block. Hess Guyana Exploration Ltd holds a 30 per cent interest, and CNOOC Nexen Petroleum Guyana Limited holds the other 25 per cent interest.
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