The recently established Department of Energy (DoE) will prepare the infrastructure for a transition to a fully fledged Ministry of Energy or Petroleum, which will be well-equipped and capable of effectively and efficiently regulating and monitoring the sector, President David Granger says.
“The Department of Energy itself, I would say, is just an interim measure. In due course, we hope to have a ministry responsible for the petrol industry that is responsible for petroleum. It [petroleum] is too large,” Granger told a press conference at the Ministry of the Presidency yesterday.
“We are now setting up, we are now acquiring premises, we are now recruiting personnel, reviewing legislation…so, a lot of work has to be done…in due course it will be a Ministry of Energy or Petroleum,” he added.
The President has hand-picked Dr Mark Bynoe to head the DoE and says that while he does not have experience in the oil and gas sector, he has the intelligence and ability to find the expert help needed. Bynoe’s appointment took effect from August 1st, 2018, the same day the DoE became operational but his lack of experience in the oil and gas sector has raised questions about his suitability for the post.
“Well, we had been examining the state of the industry for the last seven months or so, since Cabinet had considered the recommendation by (the) Minister of Natural Resources that petroleum be transferred from that ministry. We had been searching and we decided on a person who is experienced not necessarily in petroleum, but who has the intelligence and the experience to find the people who are experienced and who could administer that important industry,” the President had said in defence of his choosing Bynoe.
“He knows he doesn’t know everything, but he knows where to find people who know enough to make that sector functional and we feel he is a fit and proper person to do that. No other person has been appointed. He has the responsibility to now embark on what I would call a four-phased programme for the establishment of the department,” he added.
Recently the DoE announced that it had hired Australian-born British national Andrew Wilks as an adviser to the agency. It also advertised for low-tier jobs within the agency.
The APNU+AFC government has been heavily criticised for not hiring experts to oversee the negotiations with ExxonMobil’s local subsidiary, Esso Exploration and Production Guyana Limited, in 2016 for the controversial Production Sharing Agreement, which many analysts have said has left Guyana with far less than it should be receiving when oil production begins in 2020.
‘We did the best that we could’
Against the background of ExxonMobil’s recent ninth oil discovery and estimated reserves of over 4 billion barrels of oil equivalent, Granger was asked yesterday if he feels that this country could have done better in the renegotiations of 2016. He responded that his government did “what was in the realm of possibility” at that time.
He stressed that all contract arrangements will be reviewed by the DoE even as he reminded that government is conscious of the commitments it made in prior contracts. The president emphasised that government will do its best to ensure it gets the best deals from others.
Said the President, “Naturally these would be subject to review by the DoE, but once internal contracts have been engaged, there is no question of a removal, we will move forward and ensure we get the best advice before we move forward with any other negotiations. Given the circumstances at the time, I felt we did the best that we could in the circumstances.”
He also pointed out that the DoE is in the process of getting the best personnel to ensure that Guyanese gains the most from its resources.
“On the 1st August we set up a Department of Energy and there is a wide range of issues that have to be dealt with by that department. We are conscious of our international environment, we are conscious of our commitments, we are conscious of the large amounts of petroleum that is being discovered and we intend to establish an industry that is well regulated. It will take time to recruit the high level people that were not in place in Guyana as of May 2015. We are moving to recruit the best people worldwide to have those people in the public service in Guyana,” he said.
“There was a small unit within the Ministry of Natural Resources but (it) did not have the capacity to bear the burden of a world class petroleum industry. So the decision on the 1st August came about as the result of the Minister of Natural Resources advising that the portfolio responsibly (for) petroleum be removed from the Ministry of Natural Resources, and it was on that basis that the decision was made to set up the Department of Energy,” he added.
Building capacity
Questioned about the possibility of auditing the US$460 million pre-contract costs submitted by ExxonMobil for works from 1999 to 2015, Granger said that the Guyana Revenue Authority is working to build capacity to deal with issues such as that and others. The deadline to audit those costs will expire in another two months, on October 31st, 2018.
“As far as the audit is concerned, the Commissioner General [of the Guyana Revenue Authority, Godfrey Statia] has indicated that he is building capacity right now, he feels he can undertake those audits. Like other government departments as of May 2015, we did not have the requisite personnel in place to conduct reviews or to conduct audits of such a large industry. This is happening now. He is training persons, he is recruiting people with the talent. I am convinced he is building that capacity and will be (able) to conduct that audit. The capacity building is taking place in all the areas. It is not only GRA, it is in Finance, Environment, in Finance, Natural Resource,” he said.
“The government as a whole is there, is under the guidance of the DoE, and is refashioning its institutions to deal with this industry. We never had an industry like that ever in our history, the last big industry took place 100 years ago with the coming of bauxite. The government needs to get time to prepare and do so and it is doing so methodically, systematically, maybe some people think slow but it is being done properly,” he added.
According to the president, it will be the DoE that will determine the pace of developmental oil and gas works and that would not be determined by any company.
“The DoE is now reviewing all of the development plans. The Department of Energy is a part of the Ministry of the Presidency, so it is not a matter for Exxon. This is a sovereign responsibly for the government of Guyana that is why it was placed under the Ministry of the Presidency at the present time,” he said.
