Increasing oil income a national priority for Opposition - Norton

Increasing oil income a national priority for Opposition – Norton

Jan 29, 2024 News

Opposition Leader, Aubrey Norton

…says country must use oil meters, monitor Exxon’s work program and employ experts

Kaieteur News – Leader of the Opposition, Aubrey Norton told the National Assembly on Friday that increasing oil income is a national priority for his side of the House.
Norton was drawing the curtains on Day Five of the 2024 Budget Debates for the Opposition when he roasted the government’s laid-back approach to raking in revenue from the rapidly developing petroleum sector.

He reasoned, “This government has made it clear that its position is to depend on the addition of new (Floating Production Storage and Offloading vessels) FPSOs as the sole means of increasing oil revenues for the country.”

Norton however noted, “We, on this side of the House, view it as a national priority to increase oil income through tighter audits and monitoring to prevent financial leakages, building our human capacity to monitor oil operations, and the employment of expert firms to advise the government.”

In a subsequent comment, the Opposition Leader’s spokesperson on oil and gas, Elson Low, explained the importance of carefully scrutinizing the budgets for planned oil and gas activities submitted by the developer of the Stabroek Block, ExxonMobil. This he said, provides an opportunity for scrutiny of costs to be incurred and can avert misuse of Guyana’s oil profits by the Contractor.

According to the 2016 Production Sharing Agreement (PSA) Guyana signed with the Contractor, government must be provided with an annual Budget that clearly outlines the cost allocated to exploration, development and operational activities.

Section 10.1 of the Agreement states: “The Contractor shall prepare an annual budget pursuant to Article 7 of the Agreement (the “Budget Statement”). The Budget Statement will distinguish between Exploration Costs, Development Costs and Operating Costs consistent with the individual categories specified in Sections 2 and 3 and will show the following: (a) Forecast expenditures and receipts under the Agreement for the Calendar Year, (b) Cumulative expenditures and receipts to the end of the said Calendar Year.”

While expounding on the Opposition’s call for monitoring to prevent revenue loss in the sector, Low explained, “That includes monitoring production; we must be able to effectively use oil meters and any related systems, as well as the monitoring of oil development budgets so that the operator understands that certain expenses, as highlighted in the second audit, are not to be provided for and are not provided for, before we even get to the audit process.”

ExxonMobil is the operator of Guyana’s largest oil block known as the Stabroek Block. It measures 26,800 square kilometers and so far boasts more than 11 billion barrels of oil.
The Opposition has been critical of the government’s management of the sector, especially as it regards the lack of transparency.

Kaieteur News previously reported that Low called out the administration on its failure to keep its Manifesto promises relative to the sector.

He reminded that the Party promised to “immediately engage the oil and gas companies in better contract administration/ renegotiation.” Be that as it may, Low pointed out, “The manifesto promises renegotiation but the government has not raised a single additional dollar of revenue because it refuses to even engage the holders of Stabroek Block interests.”

Further, the Economist explained that the PPP in its 2020 Manifesto also committed to “training thousands of Guyanese” to manage the sector, however government has failed to deliver on this too as the Guyana Revenue Authority (GRA) for instance is still finding it difficult to keep trained locals in its employ to conducts audits of the oil companies, due to the government’s failure to offer competitive salaries. Low said, “The government must support the GRA if Guyana is to fully benefit from its oil resources.”

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