A special department to manage the country’s oil and gas sector is to be established in the coming
weeks, Government has announced.
Yesterday, the Ministry of Natural Resources said that it is working to have a Petroleum Directorate established and functioning within the first quarter of 2017.
Minister of Natural Resources, Raphael Trotman, in a Government statement, said that the directorate follows international models which separate policy development from regulation monitoring.
“Those are very important because we now need to start preparing and using the opportunity (of) 2017-2020 when we hope to start producing, to put things in place, as many of the things as possible,” Minister Trotman disclosed.
Some $200M has been allocated in the 2017 National Budget for petroleum management. The monies are to be used for the rental of a building to house the directorate, procurement of equipment and furnishing.
Minister Trotman said that he is hopeful that the acquisition of the building will be completed by the end of this month and that staff could be hired. “We expect by the first quarter of this year we would have had persons hired but the intention is not to have everyone in place immediately,” Trotman said.
An initial 14 persons are expected to staff the directorate including a director and deputy director of petroleum, attorneys-at-law, an economist, local content and corporate social responsibility officer, and two geo-scientists.
It has been reported that the administration is looking at the model used by the Norwegian Petroleum Directorate, an agency responsible for the regulation of the petroleum resources on the Norwegian continental shelf. The directorate is to ensure that the petroleum resources are allocated in an optimal manner at the same time as they incur minimal environmental impact. It is subordinate to the Norwegian Ministry of Petroleum and Energy.
The Norwegian agency was created on July 14, 1972 with the responsibility of managing the petroleum resources. It was originally part of the Ministry of Industry, but became part of the Ministry of Petroleum and Energy when it was created in 1978. From January 1, 2004 the division related to labour and safety issues was made a separate agency, the Petroleum Safety Authority Norway. That became part of the Ministry of Labour and Social Inclusion.
The move to have a directorate would come almost two years after a major announcement that Guyana has oil in commercial quantities in its offshore waters.
The first discovery was announced in May 2015, the same month that a new Government under President David Granger was sworn in.
Since then other wells, including one recently confirmed, that the find was one of the most significant of its kind in recent years in the region.
It will be a game changer for Guyana in terms of its fortunes.
Already, the US-owned ExxonMobil, which found the oil, has announced plans to start production by 2020.
A number of training sessions have started and approval has been granted for the construction of an on-shore facility at Berbice.
Meanwhile, the government is also developing legislation to govern the emerging oil and gas sector. “Legislation is already in circulation for a petroleum regulatory commission,” Trotman said yesterday.
The government has also been updating and drafting policies and legislation that will govern the new sector. These include Oil and Gas Policy; Revised Petroleum Act and Regulations; Local Content Policy and Regulations; Petroleum Commission Bill; Petroleum Taxation and Fiscal Legislation; Health, Safety and Environment (HSE) Regulations and a bill to provide for Sovereign Wealth/Generational Savings, Stabilization, Infrastructural, Social Welfare and Citizens Participation Fund.
It is estimated that the ExxonMobil concessions have the potential of up to 1.4B barrels of oil, worth over US$70B at today’s world prices.
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