Opposition submits several proposed amendments to draft oil law

Aug 09, 2023 News

– wants Petroleum Commission to oversee award of licences instead of minister

– calls for royalty to be as high as 15 percent

– urges cost recovery audits be completed in nine months

– demands provision of full liability coverage of oil spills

Shadow Oil Minister, David Patterson

Kaieteur News – Shadow Minister for the Oil and Gas Industry, David Patterson, on Tuesday submitted a number of proposed amendments to the Petroleum Activities Bill 2023 which is set to replace the nation’s 37-year-old oil law.

Patterson’s list of proposed amendments calls for the inclusion of a provision to establish a National Petroleum Commission, an independent body that would provide independent oversight for the sector, including the award of exploration and production licences, instead of the minister. Patterson’s also reasoned that the Bill should be armed with provisions that ensure there is technical input for this body.

Where the draft law caters for oil companies to make financial contributions to social projects, Patterson is arguing that this be reviewed by the Petroleum Commission after consultation with relevant groups. Patterson contended that such a body should also be allowed to develop a competitive financial grant system and report annually to the Public Accounts Committee on its operation.

Patterson’s check-list also raised concerns about provisions in the draft law that allow the minister, with Cabinet’s blessings, to award oil blocks, following direct negotiations with companies or countries. The parliamentarian is asking government to adjust this provision to include a requirement for the approval of the National Assembly before a licence is issued. He said a new clause to this effect can state: “the Minister shall bring  to  the  National  Assembly,  for  approval,  a  report on the conditions and terms of licence which is proposed to be granted” following those one-on-one discussions.

With respect to revenues, Patterson called for amendments to state that any signature bonus paid by the licensee shall be deposited in full into the consolidated fund in no less than 90 days after receipt and reported to the National Assembly at the end of the quarter that it is received.

He is also calling for royalty payable to the State by the holder of a petroleum production to be a minimum of 10 percent but capped at 15 percent.

With respect to audits, he said there should be the insertion of a clause which states that, ‘all audits for money deemed cost recoverable under any production licence shall be completed within nine months of the end of each fiscal year.’ He said the minister should also be made to submit  all audit  reports  to  the National  Assembly  at  the  earliest  possible  time thereafter.

Additionally, the Shadow Minister said the law should ensure oil companies have a  strict separation between  exploration  and  production activities, costs, and revenues, adding that the law should ensure no  revenue  from  production  activities  can  be  charged to exploration activities.

On environmental matters, Patterson called for there to be a clause that demands the licensee to conduct prior to commencement of operations, and at their own expense, a comprehensive baseline study on the fishing stock within the proposed area. For additional coverage, he said another clause should state that the licensee shall conduct  continuous monitoring during the lifetime of a  licence,  the  results  of  such  monitoring  exercise  shall  be  submitted  to  the  Guyana  Fisheries  Department  and  the  National  Petroleum Commission.

Patterson also proposed that the licensee shall undertake  to  provide  full  liability  coverage,  inclusive  of  appropriate  insurance  and  a  parent company guarantee which shall be in  force  for  each  oil  field  development.  He said certificates of insurance  and  this  parent  company  guarantee  should  be  lodged  on  an annual  basis  with  the  Environmental  Protection Agency.

Patterson’s amendments were seconded by his colleague Deonarine Ramsaroop, and circulated by the Clerk of the National Assembly.

• APNU, David Patterson, Draft oil law, full liability coverage, Petroleum Commission