By Kiana Wilburg
Even though some strides have been made since the giant Liza discovery to establish or improve the institutions and regulatory processes that govern the petroleum industry, Guyana’s agencies are still struggling to keep up with the rapidly emerging oil industry.
This is according to a report that was produced by Financial Analyst, Jenny Xenos, of Canaccord Genuity Corporation which is based in Canada.
Canaccord Genuity is a boutique investment banking firm that offers financial advisory services. The firm provides initial public offering, private placement, financial restructuring, fund raising, and mergers and acquisitions advisory services. It caters to metals and mining, energy, technology, financial, real estate, and healthcare sectors.
In a 2019 Industry Update report, the author noted that generally, there is a lack of specialized knowledge, experience and manpower needed to put the required frameworks in place.
She highlighted that the Petroleum division of the Guyana Geology and Mines Commission (GGMC) has been established, to monitor exploration in Guyana.
However, as of a few months ago, Xenos said that the GGMC and the Ministry of Natural Resources had a mere nine technically trained people responsible for regulating the oil and gas industry.
The Financial Analyst noted that Guyana’s petroleum industry institutions remain young and inexperienced, poorly equipped to address the challenges they face.
She said, “The good news is, recognizing their limitations, the Guyanese have been reaching out for help. They have sought advice and support from the US State Department and the IMF (International Monetary Fund) to draft legislation for environmental regulations, fiscal regime and government oversight.”
Also, Xenos said that the Commonwealth organization, of which Guyana is a member, is assisting in creating the regulations, policies and legislation for its new petroleum industry, by working closely with Guyana’s Ministries of Natural Resources and Finance.
She said that these laws and policies will govern the exploration and production of hydrocarbons, the taxation of the petroleum industry, and manage the revenue that comes from it in a way that would contribute to sustainable economic and social development.
Furthermore, Xenos noted the creation of a Natural Resource Fund which will allow funds to be managed transparently, according to good governance values.
She said, “It is envisioned that public spending will not be linked to volatile petroleum revenues and hence, would not drive up the value of Guyana’s currency, cause severe inflation or a loss of economic competitiveness.”
Additionally, the Financial Analyst noted that Guyana has been trying to learn from the countries that have suffered from the “paradox of plenty” and those who “beat the curse” by studying their cases and involving international organizations to advise and support it.
She said that the government has also engaged the Mexican Petroleum Institute to help train oilfield service workers, addressing the shortage of local skilled labor.
While the way ahead for the young oil province is likely to be challenging, Xenos said she believes the country is making steps in the right direction in order to ensure that the wall of oil revenue that is coming its way will benefit generations to come.
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