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Aug 20, 2023 ExxonMobil, News, Oil & Gas
– Opposition would try to cripple the industry or delay operations – VP Jagdeo
By Kiana Wilburg
Kaieteur News – The Guyana Government has rejected a number of legislative amendments by the political opposition which sought to bring the oil sector under parliamentary scrutiny. It believes such a move would expose the multi-billion dollar sector to unnecessary delay tactics, and in more extreme scenarios, attempts to halt industry operations. This was the rationale offered by Vice President, Dr. Bharrat Jagdeo at a recent press conference.
Kaieteur News had asked the chief policymaker to explain whether he saw any merit in some of the opposition’s proposed amendments to the Petroleum Activities Bill which is awaiting presidential assent to become the nation’s new oil law. Chief among the opposition’s recommendations was to have the Natural Resources Minister seek parliamentary approval for any oil block to be awarded through direct negotiations with international oil companies or countries.
But the Vice President said bluntly that the government saw no merit in that amendment or any of the 32 others brought by the political opposition. “They were all half-baked, all nonsense,” the Vice President told reporters last week Thursday.
The chief policy maker for the oil sector said, “They want to manage the oil and gas sector from the parliament; that is what they want to do… and you know what will come out of it…now for the public show, they want to grandstand like they are the conscience of the sector, when they are the same people ExxonMobil walked all over; Exxon and the other oil companies walked all over them,” the Vice President said.
He said the political Opposition has no moral right to speak on such matters since it was responsible for condemning Guyana to honouring one of the worst oil contracts in the country’s history. That contract pertains to the Production Sharing Agreement signed in 2016 for the Stabroek Block with Exxon and two other oil companies. It is criticized regionally and internationally for having some of the most lopsided provisions which allow Exxon and its partners to walk away with the lion’s share of Guyana’s oil resources.
With such a track record, Jagdeo alluded it would be foolish to have critical sections of the management of the oil sector make its way to parliament for the opposition to have any say. “You think we are going to hand over the management of the oil and gas sector to the parliament where the grandstanding takes place? They would shut it down for vindictive purposes. You think we are going to hand it over and give them veto power almost? It’s all a show,” The Vice President said as he questioned the opposition’s sincerity for good governance.
Apart from having the award of oil blocks subjected to parliamentary scrutiny, the political Opposition had expressed fears about the extensive powers awarded to the Minister of Natural Resources, in that he has too much discretion and may abuse same. Notably, the Bill allows the minister to be in charge of the licensing of petroleum exploration, development, production, transportation, and storage operations, including the geological storage of carbon dioxide.
The new legislation also states that the minister can delegate some of his powers/duties to an agency but revoke those delegations at any time. He is also allowed to review and apply any variations he deems necessary to decisions made by his appointees.
Jagdeo assured however that the law is clear about how the minister is to exercise his powers, while noting that in instances where it matters, Cabinet will provide guidance.
“In most cases where it matters, he has to (act) with the approval of Cabinet so he cannot, unlike the old legislation, do it on his own. It now requires collective scrutiny of the documents and the exercise of his power. We can’t vest that in (Shadow Minister for the Oil Sector, David) Patterson or (Opposition Leader, Aubrey) Norton. We vested it in a larger group that has a collective responsibility to the people,” the Vice President said.
The official also noted that at the appropriate time, the powers of the minister will transition to a Petroleum Commission.
The passage of the Petroleum Activities Bill is one of the key elements Guyanese authorities promised to have in place before the September 12 deadline for the submission of bids in its maiden auction. That licensing round which features 14 oil blocks will see awards being completed on November 1, 2023.
The indicative terms for that auction include a 10 percent royalty, a US$1M annual training fee, a US$1M annual rental fee, 65 percent of gross production going to expenses after the royalty is allocated, and the remaining profit oil being split 50/50. The law also provides for the finance minister to exempt future blocks from the payment of Property and Capital Gains Tax.
Notably, this law will only apply to ExxonMobil from a management and administrative perspective. The Vice President previously explained that Exxon which operates the country’s only commercial block will not be subjected to the new fiscal terms which also include the payment of a 10 percent Income Tax.
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Jun 15, 2024
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