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Guyana entering oil industry without legislative, regulatory framework –Nigel Hughes
By Kiana Wilburg
Attorney-at-Law, Nigel Hughes
It is highly unlikely that Guyana would be able to get the necessary legislative and regulatory framework in place before first oil comes on stream says seasoned Attorney-at-law, Nigel Hughes.
He told Kaieteur News that the country has failed to optimize the three-plus years it had to properly prepare the needed framework. In the absence of the framework, the country is now placed at a disadvantage, Hughes said.
The lawyer said, “Getting the requisite framework in time would require intensive legislative action … There has to be a process of discussions with the industry stakeholders…We just can’t rush and pass legislation like that …
“And given that we can’t even agree on if we will be having full participation in the National Assembly and we have three or four quarters left (before first oil) then it would be highly unlikely that we would have the requisite framework in place for the sector.”
The Attorney-at-law said that he is, of course, concerned about how this is going to affect the realization of the full potential of the sector. “If we are going into oil unprepared from a legislative and regulatory stance, then it clearly is going to be to our disadvantage.”
FRAMEWORK’S IMPORTANCE
Hughes noted that there could be worrying implications if a regulatory or legislative framework does not exist to allow for the proper analysis of data that will be collected by agencies from the Stabroek Block operators—Esso Exploration and Production Guyana Limited, Hess and CNOOC.
Expounding on this point, Hughes said, “Imagine going into first oil next year and you don’t have a Petroleum Commission in place. Therefore, who is beginning to manage and monitor the whole plethora of services and declarations that (the Stabroek Block operators) are going to make?
“When the operator begins providing you with all the data requested, who is processing it and in what context? In what policy framework are we then processing all this information that will be supplied to us in a language that we haven’t even begun to understand?”
“And this is not just the financial information. Therefore, they start supplying all the technical data about what they are finding and producing. Who is monitoring all of that? Who is monitoring the rate of extraction? And what policy framework are they using to do so.”
He added, “I mean, if you go into this without a commission and the necessary regulations then it is going to be whatever is provided. And the problem with that is if six to eight months pass, then and we have established a ‘particular methodology’ and then that becomes the dominant methodology without locating it within a particular framework.”
Given his comments, Kaieteur News asked Hughes if he holds the view that the country has essentially set itself up to fail. Hughes said that while he is not pessimistic, he does believe that the nation is woefully unprepared and has been delayed from doing what is needed as a result of political inaction.
The lawyer commented that it is very unfortunate that Guyana has already lost the first quarter of 2019 and is perhaps going to lose more time in the second quarter because of political inaction, which has delayed preparation for commercial production.
“I don’t want to say we wasted time, but, I think we failed considerably to optimize the time that was available to us to properly prepare for first oil,” said the lawyer.
CAN THIS BE SALVAGED?
Hughes is of the view that with an increased level of political maturity and more collaboration that is driven by the national requirements rather than party interests, then the nation can go a far way in its preparation for building the kind of framework that is required for commercial production.
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