Information relating to Oil and Gas Sector govern by EITI Standards

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Over the past several months there have been much speculations by a very small section of the media over the applications, approvals and transfers of oil blocks offshore Guyana, designed to create mischief and cast aspersions on public officials.

Below are facts relating to the oil and gas sector as published by the Guyana Extractive Industries Transparency Initiative (GYEITI) Report for 2017 Fiscal Year April 2019.

It must be noted that “the EITI Standard provides a framework and a process for promoting greater transparency and accountability in the oil, gas, and mining sectors. It is a unique, living document, shaped by the 52 countries which implement it. Each iteration of the Standard has built on emerging practice at the national and international levels in order to address both opaque parts of the sector and increasingly sophisticated forms of corruption” The EITI Standard 2019.

FACT 1:

PROCEDURES FOR THE AWARD OF OIL AND GAS BLOCKS

Licences allocation process Petroleum Prospecting Licence Pursuant to the provisions of the Petroleum (Production and Exploration) Act (1986) and Petroleum (Exploration and Production Regulations) any person may apply for a petroleum prospecting licence in respect of any block or blocks.

The Minister has discretionary power under the Act to grant or refuse the licence in respect of any block or blocks. The information required for the application is detailed in Article 13 of the Regulations made under Petroleum (Exploitation and Production) Act (1986).

The following are the main procedures to be followed when an application for petroleum prospecting licence is made:

  1. applications are made to the Minister of Natural Resources in a form set out in the Regulations;
  2. the application form must be supported by a proposal on the economic terms governing the applicant’s exploration, production activities, employment and training of citizens of Guyana;
  3. the applications should specify the prospecting area to be covered by the prospecting licence applied for, the minimum work programme and expenditure obligations in respect of the licence area shall be negotiable, and the applicant will be required to submit a technical proposal in respect thereof.

The first company that applies for a specific block and of which application is acceptable by the Minister is invited to negotiate a petroleum agreement. No other application can be accepted until negotiations of a Petroleum Agreement is complete. The Minister of Natural Resources then issues the licence and signs the petroleum agreement or may designate another government officer to do so on his behalf.

FACT 2:

For the Petroleum Production Licence

In the event of a discovery, the holder may apply for a twenty-year PPL, renewable for a further ten years. In order to obtain a petroleum production licence, the applicant must:

  1. be a holder of a valid Petroleum Prospecting Licence unless otherwise permitted by the Minister of Natural Resources;
  2. submit an application for a Petroleum Production Licence to the Minister of Natural Resources within two years of the declaration of a discovery or within such other time frame as stipulated by the Minister; and;
  3. include detailed proposals for the construction, setting up and operation of all facilities and services for and incidental to the recovery, processing, storage and transportation of petroleum from a production area (and such other matters as are required by applicable regulations). The list of information required in the application is detailed in Article 15 of the Regulations made under Petroleum (Exploitation and Production) Act (1986).

FACT 3:

Awarding contracts

In accordance with section 20(2) of the Petroleum (Exploitation and Production) Act (1986) and Article 17 of the Regulations made under Petroleum (Exploitation and Production) Act 1986, the Minister may, by notice in the Gazette invite applications for the grant of a licence and agreement in respect of the block or blocks specified in the notice, fix the period within which an application may be made, and specify the conditions subject to which any application may be made. Where the Minister has published a notice, any person wishing to participate in the bidding shall make his application to the Minister within the period and conditions specified in the notice.

After examining the applications received, the Minister may therefore select such applications for negotiations which he considers to be in the best interests of Guyana. According to GGMC, there have not been any bidding process since an attempt was made in 1986.

PA must be signed between the Government of Guyana and petroleum companies that submitted acceptable applications for the Petroleum Prospecting Licences. However, before signing the PA foreign companies must be registered in Guyana.

The terms of the petroleum agreement model are published.

 (ii) Transferability of licences

The regulations made under Petroleum (Exploitation and Production) Act (1986)98 allows the transfer of licences. The transfer of licences is allowed with the written consent of the Minister of Natural Resources. However, the Minister shall give his approval to the transfer of a licence where the transferee: –

“is a person controlling, controlled by or under common control with the transferor; and – is not a person disqualified under any provisions of the Act from holding a petroleum prospecting licence.

REGISTER OF LICENCES

The EITI Standard requires implementing countries to maintain a publicly available register or cadastre system which must be kept up to date with comprehensive information regarding each of the licences pertaining to companies covered in the EITI Report:

  1. Name(s) of licence holder(s);
  2. Coordinates of the licenced area;
  • Date of application, date of award and duration of the licence; and
  1. In the case of production licences, the commodity being produced. BDO LLP 54 EITI GUYANA

According to the Regulations made under Petroleum (Exploitation and Production) Act (1986)99, the Chief Inspector shall keep a register to record the name and address of the person to whom a licence is granted; and any interests in or affecting a licence.

Also, the Petroleum Commission Bill of Guyana (2017)100 provides the creation of a national petroleum databank including a central database of operators and other persons involved in petroleum activities, manage petroleum data and provide periodic updates and publication of the status of petroleum activities.

There is presently no publicly available register of concessions in Guyana detailing the information required by the EITI Standard, although information about the current petroleum operators, coordinates of the petroleum blocks and terms (i.e. duration) of the projects is publicly available from various sources such from the published petroleum agreements.

The Petroleum Act does not require the government to make such register of licences publicly available.

Notwithstanding the safeguards and regulations outlined above for enhanced transparency and accountability in the oil and gas sector, Guyana’s Vice President, Dr. Bharrat Jagdeo at a recent media engagement stated that with the current standards and reporting mechanisms outlined by EITI, the information relating to the applications, approvals and transfers of oil blocks offshore Guyana are public knowledge. As such, he reiterated that anyone interested in the data should follow the guidelines that govern the acquisition and release of such information.

FOR MORE INFORMATION PLEASE VIEW THE COMPLETE REPORT:

https://eiti.org/files/documents/gyeitireport-fy2017-1-128.pdf

https://eiti.org/files/documents/eiti_standard_2019_en_a4_web.pdf

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