Since completing a draft Petroleum Activities Bill, the People’s Progressive Party/Civic (PPP/C) Government has provided a two-week period for the public to submit their comments. Accordingly, the Opposition, A Partnership for National Unity (APNU), has made several recommendations for the Bill.
In their statement on the draft Petroleum Activities Bill, APNU said they would contribute more substantially to the Bill when it reaches the floor of the National Assembly for debate before its passage.
In the meantime, the Aubrey Norton-led Opposition made a number of recommendations, including urging that the Bill address issues related to oil block auctions and insurance and liability coverage – in light of recent court cases.
“This Bill potentially provides a good opportunity for us to tighten Guyana’s legislative framework so that citizens can be confident that the company assumes full liability for all environmental and industrial damages and accidents, (including oil spills) both in response to and outside of all claims and demands,” APNU said in its statement.
The Opposition meanwhile acknowledged that the Bill addresses oil companies deferring their royalty payments to the State. While they had no objection to this in times of financial difficulties, the Opposition called for reciprocity. They recommended a price-based, pre-set sliding royalty rate be put in the Bill so that Guyana can be paid more royalties in times of high oil prices.
“Such thinking should be included in the Act, without unduly jeopardising the predictability of the investment climate or fiscal regime. Legislation should make provisions for a price-based, pre-set sliding or variable royalty rate, such as what obtains in the local gold industry,” APNU said.
Another recommendation was for mandated feasibility studies for any Government-led undertaking connected to the oil and gas sector. It was also recommended that the Bill mandate the timely completion and release of cost oil audit reports.
“As audits are pivotal in ensuring the country gets its rightful share of oil revenues and are the main mechanism for oversight of company operations, timely and incisive audits must be explicitly mandated by legislation,” the Opposition added.
“The petroleum activities law, in tandem with the country’s financial Acts, must mandate the timely conduct of audits and the timely release by the Government of audit results to Parliament and the public. Penalties should be instituted on companies for the deliberate provision of false, incomplete, and deceptive information during an audit.”
Last week, the Natural Resources Ministry released the draft Petroleum Activities Bill that will eventually replace the 1986 Petroleum Act, for a two-week period of public consultation. Accordingly, public feedback will close on July 3, 2023.
The Bill contains a number of new provisions and very stiff penalties for those who fall afoul of the law. Among the areas it looks to make improvement in is mandating that oil companies make tangible contributions not only on a social level but a capacity-building level.
The Bill contains a provision enforcing petroleum exploration and production licences that may “provide for the payment of a training fee payable annually throughout the validity of the petroleum agreement.”
It also provides for oil companies to establish a system of financial support for environmental and social projects, which they will fund out of pocket. According to the Bill, “the terms of the programme and the financial contribution by the licensee are established in the petroleum agreement.”
There is also a provision that allows the Government to call on the oil company to supply it with oil if the domestic needs of the country outstrip Guyana’s crude entitlement.
However, the Bill makes it clear that “the volume of crude oil which the licensee shall be required to sell under this section shall not exceed their share of profit oil entitlement under the petroleum agreement.”
Further, the Bill also contains stiff penalties. For instance, an individual can be fined up to $30 million and/or be subjected to up to three years’ imprisonment for any violations under the law. There is also a fine of not more than $10 million for failure to comply with any order issued under the law.
The Bill also expands the legislation to cover carbon dioxide (CO2) storage and pipeline transportation, no doubt a nod to the gas-to-energy project. Notably, the Ministry assured that more regulations will follow in the coming months to further boost the sector’s oversight.
