Minister of Natural Resources Raphael Trotman yesterday read the Petroleum Commission of Guyana Bill, which seeks to provide the framework for the monitoring and regulation of efficient, safe, effective and environmentally responsible exploration, development and production of the resource in Guyana through the setting up of a Petroleum Commission.
The Bill, which has 51 clauses, was read for the first time in the National Assembly but Trotman signalled the administration’s intention to have it sent to a select committee at the second reading.
The Bill comes in light of the discovery of hydrocarbons offshore in the Guyana Basin, known as the Liza well, by ExxonMobil and its partners Hess and CNOCC Nexen. This find could result in oil recovery of close to 1.4 billion barrels.
According to the explanatory memorandum of the Bill, development of oil and gas is notorious for the risks and threats that it poses to economic and political stability, and the environment.
“Management of the sector is a major challenge for governments and domestic institutions,” it stated while pointing that the established consensus on mitigating risk is two-fold.
Firstly, governments much put in place institutions and regulatory frameworks that allow for transparent and efficient management of oil revenue and secondly oil windfall should be directed towards productive investments in physical and human capital so that long-term sustainable and equitable growth can be generated.
Needed is a regulatory body, which would be the Petroleum Commission of Guyana, a model based on similar agencies in other petroleum-producing countries.
According to the Bill, the commission would be established within a comprehensive and robust legislative regulatory framework which also takes into consideration the growth and improvement of the natural resources sector in conjunction with environmental protection and sustainable development.
The key objectives of the Bill include providing for the establishment and functions of a petroleum regulatory agency and a structured regulatory medium through which the governance tenets of efficiency, transparency, sustainability and certainty within the petroleum sector can be continuously developed and applied.
It is Clause 3 of the Bill that caters for the establishment of the commission as a body corporate, while the following clause sets out the functions of the said commission. The commission’s overarching function will be to monitor and regulate the efficient, safe, effective and environmentally-responsible exploration, development and production of petroleum in Guyana. The commission will also: monitor and ensure compliance with national policies, laws and agreements related to petroleum operations and ensure compliance with health, safety and environmental standards in petroleum operations in accordance with applicable laws and agreements and in corporation with other government agencies.
The commission would also be expected to promote local content and local participation in petroleum activities; assess tail-end production and cessation of petroleum activities and decommissioning plans; and undertake research into optimum methods of exploring for, exploiting and utilizing petroleum and petroleum products of Guyana.
According to Clause 5, the commission would advise the minister on any matter relating to the monitoring, regulation and the efficient safe, effective and environmentally responsible exploration, development and production of petroleum, at the request of the minister or on its own initiative. It would also carry out research including the optimum methods of exploring for, exploiting and utilizing petroleum and petroleum products.
Clause 6 provides that the commission’s discharge of functions shall be in a manner that is open, practical, in the interest of Guyana and shall promote competiveness. This section also caters for the commission to promote efficiency, conservation and safety on the part of operators in the conduct of petroleum activities; ensure that they carry out the activities they are licensed to perform; promote competiveness; ensure transparency; and have due regard to sound and internationally accepted financial principles.
In Clause 7, provision is made for the custody and authentication of the seal of the commission, which shall be kept in the custody of the chairperson or secretary and authenticated by their signatures. It also provides for all documents, except those required to be under seal, to be signed by the chair, deputy chair, or the commissioner and the secretary where duly authorized by resolution of the board.
Clause 8 authorises the minister to give general directions to the commission, while Clause 9 empowers the commission to give directions to operators consistent with applicable law and good oilfield practice to ensure proper and optimal production of petroleum and to encourage environmentally-responsible operations.
Clauses 10 to 27 make various provisions relating to the commission’s board of directors, which will be the governing body of the commission. The board will be responsible to the minister for the execution of its policy, functions, and duties and shall give effect to any directions and assignments given to it by the minister under the Act.
Clause 28 makes provision for the commissioner to be appointed by the minister after consultation with the board; the commissioner shall be a full-time employee. Any person who holds direct or indirect shares or other beneficial interests in any entity operating in or providing services to the petroleum sector, or is a member of the board or an employee of operator shall not be appointed commissioner. Also ineligible are persons convicted of any offence, public officers, members of parliament, ministers and members of a local democratic organ.
The Bill also provides for the board to employ officers and other employees for the purpose of carrying out its functions and for the commission to retain the services of professionals.
The Auditor General is mandated under the Act to audit the accounts of the commission and report to the minister who has the power to appoint an auditor at any time. The minister of finance may, by an order which will be subject to affirmative resolution of the National Assembly, exempt the commission from liability for any tax or other charge due to the revenue of Guyana.
The board would be required to submit an annual report on the activities of the commission to the minister. Summaries of annual reports and statements of accounts shall also be published on the website of the commission for public perusal.
