Last Thursday, the National Assembly passed the Petroleum Activities Bill 2023 which provides for the exploration, production, storage and transportation of petroleum but 31 amendments by APNU+AFC MP David Patterson were rejected by the government.
The Bill now replaces the Petroleum (Exploration and Production) Act of 1986.
In the amendments he proposed, Patterson wanted the new Bill to have more collective oversight from the National Assemb-ly and a special commission, on the powers vested in the Minister.
He called first for the new Bill to cater for the creation of a “National Petroleum Commission”.
He had proposed that upon the constitution of that Commission, all applications would be submitted to the Commission, which shall then forward recommendations to the Minister, for further action.
Minister of Natural Resources, Vickram Bharrat in presenting the Bill had noted the importance of the oil and gas sector, which he said will continue to grow, but would face challenges if there were no updates to the 1986 Act.
Bharrat had stressed that the 2023 bill will strengthen the current system in place, bring more accountability and transparency to the sector and “also bring a new dimension to the oil and gas sector as it continues to grow.”
According to the Bill, the Minister shall be responsible for the administration of the Act, and that that responsibility shall include the general management of the petroleum resources of Guyana in accordance with Act or any other written law.
Patterson’s proposed amendments, however, sought to call for more oversight of the Minister by not only the Commis-sion, but the National Assembly, especially where licensing is concerned.
Against this background, he wanted added to Clause 7, the requirement that the Minister bring to the National Assembly for approval, a report on the conditions and terms of license; and should Cabinet grant the Minister approval to conduct direct negotiations, then the Minister should be required to seek the approval of the National Assembly before issuing the licence.
Meanwhile, hoping to have been inserted as a new Clause 19 (5), Patterson wanted upon the constitution of the National Petroleum Commission, that all petroleum exploration licence applications be submitted to that Commission which was to then forward recommendations to the Minister for further action.
As opposed to acting on the sole advice of the Minister, Patterson had called for inclusion of the National Petroleum Com-mission which he said would be able to provide technical input as needed.
As an addition to Clause 27 to avoid what he said is a licensee making several discoveries, but not having them appraised, Patterson said a time limit needed to be placed on the period between discovery and appraisal.
For this he proposed a period within that specified in the notice, “but not exceeding two years from the date of discovery.”
Meanwhile, he said that the authorisation granted under Section 29 (2) shall not exceed seven years after the notice of discovery. He proposed this to be the limit on the length of time which a licensee can retain a potential commercial discovery.
Stating that a proven and appraised commercial discovery “is a national asset and should be disposed via competitive tender and not direct negotiations,” Patterson further called for Clause 32 (3) (b) to be deleted.
That Clause provides, “the Minister may, on application by the licensee, if the Minister is of the opinion that there are reasonable grounds for doing so, by instrument in writing, allow the licensee such further time, which in his opinion is reasonable in the circumstances of the case, to make a declaration of commerciality and apply for the grant of a petroleum production licence.”
In Clauses 33, 37 (2) (a) and 39 (1) Patterson again called for oversight from the Commission of the Minister’s powers.
Clause 33 allows for a licensee whose petroleum exploration licence is in force to, before the appraisal period ends, be allowed by the Minister to apply for the grant of a petroleum production licence.
Clause 39 provides that the licence may be renewed only once.
It states that “the Minister may, in exceptional circumstances, consider an application for a second renewal of the production licence if the producing life of the reservoir is expected to extend beyond the first renewal period, and a second renewal of the production licence is considered in the national interest.”
What Patterson proposed, however, was for those steps to have been taken by the Minister, only after receiving recommendations from the National Petroleum Commission.
Regarding a signing bonus, Patterson had proposed that any signature bonus paid by the licensee should be deposited in full into the Consolidated Fund in no less than 90 days after receipt; and that it be reported to the National Assembly at the end of the quarter that it is received.
He had also called for the established range for royalty payable to the State by the holder of a petroleum production license to be no less than 10% and not more than 15%.
Additionally, he proposed that all audits for money deemed cost recoverable under any production license be completed within nine months of the end of each fiscal year; and for the Minister to submit all audit reports to the National Assembly at the earliest possible time thereafter.
This, he explained, would have been to establish a fixed timeline for the completion of audits. The timeline is similar to that as prescribed in the Audit Act, with regards to annual reports.
Patterson said, too, that a strict separation ought to have been maintained between exploration and production activities, costs, and revenues; stating that no revenue from production activities could be charged to exploration activities.
Against this background, noting the provision for “ring-fencing,” he said that the licensee is restricted from commingling production and exploration costs.
Patterson had proposed that the National Petroleum Commission shall, after consultation with relevant social protection, relief, environmental protection, conservation, and development organizations in civil society; develop a competitive financial grant system.
The Commission he said, would have been responsible for the operation of this grant scheme but could have delegated its responsibilities with Ministerial approval; and for the Commission to report annually to the Public Accounts Committee.
This, he advanced, would have been to ensure input from all relevant agencies to the project and the extent of the financial contribution. The agreement, he said, would have detailed the exact financial requirement and further, for social projects to have been executed by the Commission as opposed to the licensee.
Regarding the decommissioning fund, he said that this should have been held in escrow at an approved financial institution to buffer and take into account of future challenges.
On drilling he said that permitting this or any such activities 200m from a town is unacceptable, and there needed to be an adequate “buffer zone” between townships and petroleum operations. He proposed five kilometres instead.
Meanwhile, he submitted that except with the consent as prescribed to titled land under the Amerindian Act; Amerindian Titles lands should be included in the Act, for which content must also be obtained.
In the event of other related provisions conflicting with the Amerindian Act, his proposition was for the latter to have taken precedence.
Proposing further amendments where the licensee is concerned, Patterson had said that prior to commencement of petroleum operations, the licensee shall conduct, at their own expense, a comprehensive baseline study on the fishing stock within the proposed area.
He said, too, that the licensee should have been made to conduct continuous monitoring during the lifetime of a licence, the results of such monitoring exercise shall be submitted to the Guyana Fisheries Department and the National Petroleum Commission. The approved reports shall be placed in the public domain by the Guyana Fisheries Department.
The responsibility for monitoring fishing and navigation areas he said, ought to have been with the licensee, for the duration of the license and approval of the Guyana Fisheries Department and the Commission.
Finally, submitting a new Clause 93 (3), Patterson had proposed that the licensee undertake to provide full liability coverage, inclusive of appropriate insurance and a parent company guarantee which shall be in force for each oil field development.
Certificates of insurance and this parent company guarantee he said, should be lodged on an annual basis with the Environmental Protection Agency.
He said that this would have ensured the availability of funding in the event of a major peril.
Background
Powers and duties of the Minister under the Bill, include the licensing of petroleum exploration, development, production, transportation, and storage operations, including the geological storage of carbon dioxide, the prescribing of subsidiary legislation, and the issuing of such guidelines as may be necessary for effectively carrying out the purpose of this Act, coordinating and cooperating with relevant agencies of the state regarding the environmental and safety aspects of petroleum operations, the monitoring of the conduct of petroleum operations to ensure compliance with this Act, and the terms and conditions of a licence or permit granted, or a petroleum agreement entered into under this Act, and any other written law.
Additionally, the Minister will also be responsible for directing persons conducting petroleum operations to perform corrective actions where there is noncompliance with this Act and the terms and conditions of a license or permit granted, or petroleum agreement entered into, under this Act and any other written law, and imposing sanctions for non-compliance with this Act; developing terms of reference and prescribing qualification criteria for the grant of a license, giving licensees or holders of a permit directions as to any matter with respect to which regulations may be made under this Act, doing any and all things required by any direction given under section 17 and recovering such costs and expenses incurred for doing so in the same manner as revenues due to the State; directing that such studies and investigations, as the Minister deems fit, be done; and exercising any other powers required for the management of petroleum resources and operations carried out under this Act.
APNU+AFC Parliamentarian Shurwayne Holder in his presentation on the debate of the Bill in the National Assembly had said that the Bill gives absolute power to the Minister, and according to him, perhaps the “most disappointing issue” of the Bill is the absence of the National Petroleum Commission.
“There is absolutely no references to it. Mr. Speaker, the APNU+AFC share the view that our oil and gas sector should be insulated from politicization and as such the sector should be managed by a competent multi-disciplinary group which would comprise the petroleum commission,” he had said.
Following the debate, a motion had been moved to have the amendments presented to the National Assembly by Patterson form part of the Bill. However, after it seemed that those voting against the amendments being included, were louder, Patterson called for a division allowing individual votes to be taken resulting in 28 voting for the amendments to be included, 33 against, and one declining to vote.
After the Speaker, Manzoor Nadir declared that the “amendments are defeated” the bill was eventually read for a third time and passed in the National Assembly as printed.
