Oil and gas industry... Guyana stands to lose big time if outdated laws not changed -EITI Analyst

Oil and gas industry… Guyana stands to lose big time if outdated laws not changed -EITI Analyst

Mar 24, 2019 News

By Kiana Wilburg

Most, if not all of Guyana’s laws pertaining to the extractive sector need to be updated. This is necessary if Guyana is to succeed, especially as it relates to its acceptance in the Extractive Industries Transparency Initiative (EITI) fold.
This was revealed by Rached Maalej who has been hired as the Independent Administrator to prepare Guyana’s first EITI report.
The EITI represents a body of standards and informs the way the natural resources sector is governed. Overall, the standards dictate that the nation’s resources, such as oil, gas and minerals, should benefit all citizens.
During an exclusive interview with Kaieteur News yesterday, Maalej, who works with UK accounting and business advisory firm, BDO LLP, said that the laws are too old.
He said, “Whenever you have a law more than five years, you need to amend it. It is obvious. Don’t even bother with opening that law much less if it is more than 10 years. We are in 2019; everything is developing and so many things exist now which influence the way in which the extractive sector is right now.
“Even the economy has changed; Guyana itself has changed. The structure of the stakeholders today has also changed. The production has changed. Therefore, how can you have a law that is more than 10 years old?”

EITI Analyst, Rached Maalej

In updating the laws, Maalej said that Guyana’s success in the respective sectors and even with the EITI process would be improved. But the failure to get this done could hinder progress, the analyst noted.
In 2016, the Government of Guyana received a report from the United Nations Development Programme (UNDP), which spoke to the need for a legislative review to ensure the success of the emerging oil sector in particular.
To date, not a single piece of petroleum-related legislation has been updated. In the report that was written by Anthony Paul, Principal Consultant of the Association of Caribbean Energy Specialists Ltd, it was noted that several laws and regulations, which need updating include: the Guyana Geology and Mines Commission Act; the Mining Act; the Petroleum Exploration and Production Act, No. 3 of 1986; the Petroleum Exploration and Production Act Regulations, 1986; the Petroleum Exploration and Production Act, 1998, Chapter 65:10; the Environmental Protection Act; and the Occupational Safety and Health Act, Chapter 99:01.
Paul in the report said that the legislative framework in Guyana is not surprisingly, unprepared for managing the petroleum sector in its current phase of development.
The Principal Consultant said that both legislative and institutional frameworks and their component parts are critical for successful management of the resource. He opined that given the pace of change, Guyana is at risk of losing very significant value unless these gaps are closed.

Paul said, “In order that Guyana maximizes the benefits available from oil and gas, while mitigating the possible negative impacts, a customized governance framework, including the legislative and institutional components, is a necessary ingredient for success.
“That said, the approach to designing them can follow an intuitive approach, which can stand the test of time, if properly designed, built and maintained, while adhering to the key principles of good governance.”
The Oil and Gas Consultant continued, “Experiences from other countries will influence the processes involved in developing an appropriate legislative framework and a world class regulator. These experiences tell us that a governance framework requires that the policies, legislation and institutions must be designed, set up, operated and overseen in a manner that is inclusive, transparent and accountable.”
He added, “To be effective, these require that a monitoring, review, reporting and revision mechanism is built into the system and not left as an afterthought or to the whims and fancies of future governments or regulators.
One danger in not implementing this mechanism is that, as things change and in the absence of new systems, decision making is ad hoc and the quality of decisions and outcomes are entirely dependent on the capacity and independence of the regulators.”