Only months away from first oil, Department of Energy (DoE) Head Dr Mark Bynoe yesterday said his agency will be on firm footing to ensure the country gets value for money but former government adviser Dr Jan Mangal differs and pointed to the dearth of essential legislation.
“It depends on how you define ready. If you mean everything will be in place; all your i’s will be dotted and all t’s crossed, I would say no. But would we have a workable framework that would allow us to ensure that we reduce value leakage and that optimum returns are coming to Guyana? In my humble opinion, I would say, yes,” the DoE Head told a press conference he held yesterday at the Ministry of the Presidency.
In February, Bynoe had also stated that by the end of the month the agency would finalise a legal review and gap analysis that it was undertaking and that would facilitate the possible drafting of supplementary legislation as what this country has is not enough or relevant enough.
He revealed yesterday that the Department is currently in possession of the analysis and diagnostic review but it has to go through the process of consultation with the other stakeholders since it would not only impact the department but also different government agencies.
“It is because of that review you will see us advertising for legal advisory services because that review is expected to point the way in terms of what needs to be repealed and replaced, what needs to be amended, what needs to be made contextually relevant to the realities we face today. We have been on record indicating that the primary legislation which is the 1986 Exploration and Production Act, is silent, for example, with regards to issues on downstream activities,” Bynoe added, while noting that the old legislation also requires enhancement with regards to decommissioning of wells and its costs among other issues.
He believes that his agency will complete proposals for legislative changes by first oil, but it will be up to the politicians in the National Assembly to ensure that those proposals are enshrined in law.
“That is not an easy question for me to answer because it is not only in the purview of the Department of Energy. After this is completed it has to go to Parliament and whether there is that, that resolve to move that through is outside of the control of the Department of Energy. What we need to do is to have the revisions, replacements completed and that we have the time to get that done,” he said when asked about the DoE’s completion of legislation for the sector. He further said, “The Department of Energy will get its part done”.
Bynoe explained that the works planned are not difficult to execute, while saying that other countries would have achieved major legislative and constitutional changes within a year. He said if there is the political will from the powers that be here in Guyana, the same could happen. “The issue is if there is that political will to get it done. The Department of Energy will get its work done,” he stressed.
‘Not prepared’
Former Government Advisor Dr Jan Mangal believes that this country has very little in terms of a comprehensive legislative framework. He advises that Guyana needs to start with an overarching Act for petroleum, which will be like an umbrella over all the other subordinate legislature, and then ensure all these different pieces are aligned with each other.
“The only two pieces of legislation which were presented and passed have all had serious issues. The Petroleum Commission Bill was unacceptable and we managed to get it recycled, but I worry the new revision could be as bad as the first. Then the sovereign wealth fund bill (natural resources) gave the relevant minister dangerous levels of power and decision making, and it was passed with no consensus in Parliament since the opposition were not present. Hence the track record has not been good and Guyana is not prepared,” Mangal posited.
Bynoe does not agree and insists that his country will have the support needed. With assistance from the World Bank to get advisory services on legal matters for the oil and gas industry, the DoE is forging ahead to get started as it aims to “enhance the government’s capacity to achieve its management goals for the petroleum sector through interventions focused on supporting the enhancement of legal and institutional frameworks….”
The DoE will hold off on any new licensing rounds, possibly until the second quarter of next year, as it plans to have strong legislative and regulatory frameworks in place before it does so.
“At this point in time, we cannot move to another licensing round until the legislative framework is in place, otherwise you would be licensing under the old legal framework, which I pointed out (has) a number of weaknesses. So, we want to get that in place. I have been on record also, [as saying] that we want to encourage further plays in the shallow continental shelf,” Bynoe said. He explained that the data packaging and seismic work needed for the latter plans would take about 10 to 11 months, in terms of shooting and processing.
Extracting
“So I don’t think at this stage Guyana is anxious to be rushing to another licensing round. We have enough to keep us occupied as we move forward to get those pieces in place so that when we move in that direction we are extracting the best possible value,” Bynoe added.
And with an inter-ministerial group which focuses on decisions and policies for the sector, the DoE head said that the government is working assiduously to ensure the nation’s best interest.
“We will have the commercial section up and running. We should have the major elements of the legal framework in place. Persons often complain what is happening with regards to the Petroleum Commission. Some say if the Petroleum Commission doesn’t come in before first oil, the sky will cave in. We are saying not necessarily. As precedent has shown, that they had the Jubilee field in Ghana for example at production even before they had the Petroleum Commission in place.
“Would you like to have it before? Perfect! But if it is not, it doesn’t mean that everything grinds to a halt. We have been working closely with the petroleum division at the [Guyana Geology and Mines Commission] whose own capacity requires some form of enhancement and they have been. They have been performing the role of the Petroleum Commis-sion. We have been working closely with the EPA [Environmental Protection Agency] … We have seen their bits and pieces are coming together. Through the inter-ministerial technical committee we are working to ensure that at least the key elements are there,” he added.
Another key element of the DoE is its crude oil lifting and marketing plan, which would see this country selling its own share of oil “independently to get the highest price on the international market.” Advisor to the DoE Matthew Wilks has said that the agency has advertised for a crude market advisor to provide analysis of the best mechanisms for government going forward in this area.
And while the DoE is not the responsible agency for the crafting of this country’s oil spill response plan, Bynoe said that all relevant government agencies are pooling resources and working together to ensure that this country has the necessary oversight and plans in place if there is such an occurrence.
The DoE has also a number of other advertisements for staff and consultants for a number of projects it plans to undertake. The EPA and the Civil Defence Commission were singled out as agencies working with the DoE.
With a work plan in hand and the gap analysis to be completed by next month, the DoE believes that it will be sufficiently equipped for when ExxonMobil begins its 120,000 barrels of oil equivalent per day pumping in the first quarter of 2020.
“So yes, the major tenets would be there for us to be able to be confident that Guyana will not be involved in value leakage and will be able to optimise returns,” Bynoe said.
