As Guyana continues to develop its nascent oil and gas sector, massive allocations were approved during the Budget Estimates on Tuesday to advance key works in auditing oil blocks, reviewing Guyana’s oil laws and agreements and even setting up the new Local Content Secretariat.
Minister of Natural Resources Vickram Bharrat was tasked with detailing the large proposed expenditures for petroleum management on Tuesday.
He was pressed by Opposition Parliamentarian David Patterson on the specifics of the $200 million capital expenditure allocation for “institutional support” to aid the management of the petroleum industry.
And the Natural Resources Minister pointed out that $10.7 million has been allocated to start the cost recovery audit from the Stabroek Block during the period 2018 to 2020.
“…we envisage this to be a multi-year process but we want to start in 2022,” Bharrat said.
A cost recovery audit of the period 1999 to 2017 has been ongoing, Bharrat said earlier this year. The audit of the 2018 to 2020 period is part of the second period of auditing for the Stabroek Block, where the production of oil started in December 2019.
Simply, these cost recovery audits are done to identify whether there have been overpayments and how those overpayments can be potentially recovered.
Concerns had been raised that the audit of the post-2017 period had been stalled for some time but on Tuesday, Bharrat reminded parliamentarians that the government has been keen on ensuring that local auditing capacity can be built to scrutinise these accounts.
And, four local auditing firms have formed a consortium and will work along with an international company to audit the accounts. It is expected that working alongside this international company will allow the local companies to be trained in conducting the audits themselves.
This, Bharrat reasoned, will allow the country to conduct these cost-recovery audits more regularly- perhaps at a biannual or quarterly period. He also said that the government will have to audit other operators working in the other oil blocks.
Other monies have been approved for key projects including the creation of a new, model Production Sharing Agreement (PSA) that will allow Guyana to augur greater benefits when entering into new agreements with oil companies; and the review of Guyana’s 1986 Petroleum (Exploration and Production) Act
Meanwhile, under current expenditures for petroleum management, $20 million has been approved for the implementation of the Local Content Secretariat- including the creation of the portal for companies and Guyanese professionals, their registration and the database.
The new Local Content law provides for the establishment of a Local Content Secretariat that will develop and maintain a Local Content Registers of Guyanese nationals for employment and Guyanese nationals and Guyanese companies from which goods and services may be procured.
The minister also said that $88 million has been allocated for the review and evaluation of another field development plan- Uaru.
Currently, the government is reviewing ExxonMobil’s fourth field development plan for the Yellowtail Development offshore Guyana. This adds to the other projects: Liza phases One and Two and Payara.