Five Years Later... Guyana moves to review oil laws without policy for guidance

Five Years Later… Guyana moves to review oil laws without policy for guidance

May 12, 2020 News

By Kiana Wilburg

The Energy Department is in the process of fine-tuning a contract with Hunton Andrews Kurth LLP, an American law firm, to review Guyana’s law, but this is being done without a petroleum policy for guidance on what Guyana wants to achieve in its oil industry.

International Energy Lawyer, Jay Park QC,

During a recent webinar on Guyana’s petroleum regime, international lawyer, J. Jay Park QC, alluded to the importance of having a petroleum policy first, then moving to write or amend laws.
Park said, “…How do we go about a process of regulatory reform? We know that we need to start, at least when I work on a petroleum law, I say to my client, ‘Please tell me what’s your policy? What is it you want to achieve?’ I can express that in the law. (But) we need to begin with Petroleum Policy.”
Park. who has 35 years experience in the industry, said that there has been some rudimentary action in this regard with Guyana. The Queen’s Counsel said however that it behooves the government to focus on what it wants to achieve, then it can amend the law, followed by writing more detailed regulations. Once that is done, Park said, then the country can move on to creating a better petroleum agreement and go about further awards on a more competitive basis.
The Managing Partner at Park Energy Law said that the principles of such a policy will then be expressed in the laws, regulations and contracts; increase transparency and aid efficiency in petroleum activities and how they should be done; maximize local benefits; include provisions on protecting the environment; and ensure Guyana has a sustainable regime. Park believes these are key features that should be part of the policy, part of the law, and part of the regulations.
Further to this, the international lawyer explained that these features are important and desirable in order to avoid the resource curse which is often called the paradox of plenty. This he said, is where many states have lots of oil resources but they fail to prosper. “It is ironic because you don’t expect a State with so much resource to end up with a negative economic result.”
But there are a number of reasons why oil rich states land in this quandary. According to Park, one of them is being export reliance. In this regard, the lawyer said that the resource gets exported but there is no local use that is made of it or it is not upgraded along the value chain.
Park said that the petroleum regime can help to avoid the resource course but there must be careful attention to the features it needs to have. He said that this is what Guyana should be looking at as it goes through the amendments to its laws.
Even as the Energy Department proceeds with the conclusion of the contractual details with the US firm, the entire arrangement has come in for heavy criticism locally and internationally. In fact, the Directors of the World Bank Group have received two letters calling for an investigation into possible conflict of interest. The letters note that Hunton Andrews Kurth enjoys a 40-year relationship with ExxonMobil. There are concerns about what this relation could mean for Guyana which has to use the said laws to regulate ExxonMobil and other oil companies. Energy Department Director, Dr. Mark Bynoe has told Kaieteur News that he is not opposed to the concerns of conflict of interest, and if they do exist, they should be addressed.

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