This month marks three years since oil production began here for which this country has received some 15 million barrels in profit but there is still no Petroleum Commission to regulate the sector despite solemn promises by senior officials of the current administration.
The 15 million barrels plus royalty adds up to around US$2B. Stabroek News sought to measure the response from three sectors – the government, ExxonMobil and random citizens on milestones reached and direct benefits.
The key gap remains the absence of the regulatory body which is meant to set a comprehensive framework for full compliance with the laws and the policies of the country.
Just after the PPP/C government was sworn in on August 2nd 2020, current Minister of Natural Resources Vickram Bharrat had said that the Commission was a priority.
He had told Stabroek News in an August 6th 2020 news item that he hoped that as soon as the 13th Parliament began that the Petroleum Commission Bill would once again be tabled, as his government believed that it is needed for the sector to be insulated from political interference before major decisions for the sector are made.
“Oil to a country could be a curse or a blessing, but it all depends on the management of that sector. The oil and gas sector will definitely need management in terms of responsibility and transparency in keeping with the Santiago Principles and that is what we intend to bring to the ministry,” he had told Stabroek News in an interview following his swearing in.
“The Petroleum Commission Bill was tabled by the previous administration about three years ago and sent to a special select committee. Unfortunately, that bill still languishes in that Special Select Committee. Such a special Bill that will reduce political interference in the managing of that sector I believe is needed to ensure transparency,” he added. More than two years on, his administration is still to deliver a bill.
Minister of Legal Affairs and Attorney General Anil Nandlall SC had also underlined that the Petroleum Commission Bill was a priority for the government and they would be working to ensure that it was swiftly returned to Parliament.
“While we were in opposition, we had some fundamental conceptual problems where it was felt that there was an overconcentration of power to politicians. As a result we withheld our support on the floor. The Minister at the time, Raphael Trotman, expressed some reservations about the Bill and he had asked it to be sent to the special select committee,” Nandlall had said in the August 6th 2020 news item. He stressed the importance of having a Bill that reflected the best for the people of this country and also the benefits of the establishment of the Commission.
The Bill was first presented to the National Assembly in May of 2017 and returned for its second reading and debate one month later. The People’s Progressive Party/Civic, then in opposition, had stoutly criticised it, questioning the powers granted to the Minister of Natural Resources.
President Irfaan Ali had also been most vocal in his criticisms of the bill while as an opposition MP and objections were also raised by the PPP/C, about the lack of independence of the commission, general governance, and its ability to operate in a non-discriminatory and apolitical manner.
“When we examine section 8 which deals with the Power of the Minister to give directions to the Commission, it is clear that the Commission will hardly be able to work without the direction and control of the Minister. According to Section 8, the Minister is not only allowed to provide policy guidance, but also give direction to the Commission regarding, size of the establishment, the employment of staff and the terms and conditions of employment, the provision of equipment and use of funds, reorganization of such works of development as to involve a substantial outlay on capital account, training, education and research, the disposal of capital assets; the application of the proceeds of such disposals,” Ali had stated .
“Thus, the Minister is literally empowered to dictate inter alia, how many persons an independent Commission should employ, what should be the terms and conditions of employment for the staff of the Commission, how an independent Commission should use its funds et cetera. Based on our review of similar legislation in other countries, we were unable to locate one that bestows comparable powers to the Minister. Indeed, based on our review we found that the only power the Minister is granted in other countries is the power to provide policy guidance,” he had added.
There has been no positive statement in recent months from Ali on a Petroleum Commission.
National Petroleum Day
Oil production commenced on December 20th 2019 under the previous APNU+AFC government and former President, David Granger, had declared the occasion as historic, and named it ‘National Petroleum Day’. He had said that the proclamation would remind citizens of their “duty to protect the country’s patrimony and to ensure the sustainable management of [its] finite hydrocarbon resources.” But at the time of the declaration, Granger’s government had already fallen to a no-confidence motion and the country was swinging into full elections campaign mode. The APNU+AFC would then leave office in August 2020.
The PPP/C assumed the mantle of government in August 2020 and claimed sustainable management as its praxis in the two and half years it has been in office.
“The PPP/C Government continues to take pride in the sustainable and proficient management of the petroleum sector, including other natural resources as we continue to hoist Guyana as a South American country for economic and natural resources management and development,” Minister of Natural Resources Vickram Bharrat told the Sunday Stabroek last week.
“We will continue to be guided by the Low Carbon Development Strategy 2030 and President Irfaan Ali’s Vision 2030 for infrastructure development and economic prosperity under the One Guyana initiative,” he added.
The Minister of Natural Resources recalled that it was in the month of May [2015] when the breakthrough Liza 1 discovery in the offshore Stabroek Block occurred.
When first oil was celebrated in 2019, it was from the Liza Phase 1 with an initial projected daily average of 120,000bpd. Bharrat noted as the operating year 2022 comes to an end that from the Liza Phase 1 well the total oil production volumes grew to approximately 114,713,412 bbl. “The maximum peak production occurred on July 26th, 2022, with daily production volumes reaching 155,457 bbl,” Bharrat informed. With the additional FPSO, Liza 2, the current daily production has exceeded 370,000 bbl.
Regarding crude oil sales, the Government of Guyana received its first lift of profit oil from the Liza Destiny FPSO on the 19th of February 2020. To date, “the GOG has received fifteen (15) million barrels of profit oil from the Liza Destiny FPSO (and Unity FPSO),” according to the Natural Resources Minister. Bank of Guyana Governor Gobind Ganga stated that as of last week, Guyana had some U.S$1.285B remaining in its Natural Resource Fund (NRF) account. Debited from the NRF account this year, in accordance with the NRF law, was US$607.6M.
Activity update
ExxonMobil did not respond to the questions asked but instead one of its representatives said that “most of the information sought could be found in the activity update we recently issued”. That update stated that more than 4,400 Guyanese or 64 percent of the industry’s workforce are currently supporting the company’s operations. “It speaks to the early commitments that we made around things like the Centre for Local Business Development starting in 2017, working with other organisations like the TVET schools, and the ministries to ensure that people are well-trained and available and able to contribute and play an important part in developing the nation’s resource,” the release quoted Country Manager, Alistair Routledge, as saying.
“Since the first discovery in 2015 ExxonMobil Guyana and its contractors have spent more than $140 billion with Guyanese suppliers,” it stated.
But while the government and ExxonMobil have tried to outcompete each other about the benefits being received by the citizenry, the response by some locals has only served to dampen that enthusiasm. Some agree that while opportunities have been had for a number of persons, they do not believe that all citizens are seeing tangible benefits. “I don’t want to hear about the oil money because I am not getting any. All that billions you are talking about… we don’t see here. You see what I am doing? I have to hustle…,” a vendor on Regent Street told this newspaper.
However, 28-year-old Randel Wright who works at a firm in the capital says that people are benefitting. “People might not be getting money in their hands like they want to but the country is benefitting. It is not a selfish thing. My cousin works offshore and he shared that plenty people has gotten jobs and training. He is not just a lucky one,” he said. “If I think that more can be done? More can always be done. But I think with the right direction we will see where the money is going. I want it to get to a point where I can collect directly too but I am also very real. That will take a while…,” he said.
Other persons Stabroek News spoke with did not want to give their names because many felt that their views may be misinterpreted as a direct attack on government. Many lauded that the oil resource was found and is garnering revenue. Some also listed areas of benefits. One man, Linden Parjohn, posited that “any money can do well if it is managed correctly.” Guyana’s Minister of Natural Resources said that his government will ensure accountability and he pointed to audits of operations that have been initiated. “To ensure accountability and transparency, a financial audit of expenditures and profit oil during the period 1999 to 2017 was done. Similarly, a local consortium VHE consulting was contracted to audit the cost-recoverable expenditures from the Stabroek block during the period 2018 to 2020,” he said. However, the pre-contract audit is still to be made public.
