Guyana aims to make the most out of Liza
Updated: Mar 14, 2019
Dated: November 17th, 2017
The excitement generated in Guyana by ExxonMobil’s giant Liza discovery was in evidence last week when exploration managers from a host of companies packed out an AAPG technical conference on the deep-water exploration of the Colombus and Guyana basins in Georgetown.
Those attending would dearly love to emulate ExxonMobil’s success in finding the Liza trend.
However, they may also have noticed a tangible sense of anxiety among some Guyanans about how their their country will cope with an influx of revenues from powerful oil companies.
Guyana’s current regulatory framework is grounded upon the country’s outdated 1986 Petroleum Exploration and Production Act and, to help tackle this, the Commonwealth Secretariat is playing a consulting role in examining legislation as part of an upstream policy review.
Petroleum Commission
The Guyanan authorities have also been drawing up plans for a new regulatory agency, to be called the Petroleum Commission of Guyana.
These proposals are in select committee stage at the national assembly and will be reviewed by the Commonwealth Secretariat’s legal department later this month.
“We have received scores of memoranda because it seems that everyone has a view on what type of commission we should have,” Natural Resources Minister Raphael Trotman told Upstream.
“We started off with a remit to model the regulatory agency along the lines of other commissions in Guyana, but there has been a loud call for more autonomy," he said. “The government is carrying out its own review to see if we can accommodate some of these views.”
A new petroleum act will also seek to define rules on reservoir unitisation and there will be complementary regulations covering areas such as health and safety and environmental matters, Trotman added.
This draft regulatory framework is expected to go through more alterations before a final vote, but Trotman said he expects the law to be in place in the first quarter of 2018.
Guyana’s government has been working with an international consultant specialising in local content with the aim of coming up with a draft policy proposal by the end of the year. These consultations have thrown up the idea that Brazil’s experiment with highly prescriptive local content did not work, yet Trotman acknowledges there are still a lot of calls in Guyana for some kind of percentages to apply.
“Obviously we would like to see as many Guyanese involved as possible, but we need to foster training and manage expectations. Many Guyanese think they have a right to jobs, but not everyone can put on a pair of overalls and work on an FPSO,” Trotman said. "Government figures suggest Guyana will be raking in $300 million per annumrom the first phase of Liza alone, which Trotman describes as a “huge amount of money.”
“We will have an Act before the start of production in 2020,” Trotman said, declining to comment on the amount of money involved.
“Many have recommended the Norwegian model, which puts the overwhelming majority into savings. This model undoubtedly has some very admirable features but I think we should craft something that is uniquely suited to Guyana, which is a developing country with a deficiency in infrastructure and also on the social welfare side of things,” he added.
Guyana President David Granger’s administration also hopes to use the boom in oil revenues to provide leverage for the development of Guyana’s interior, including paving the long jungle and savannah road to the Brazilian border.
“We see the future of Guyana as the development of our hinterlands. As we create roads, new communities, hospitals and schools will necessarily follow, Trotman said. “Obviously we will have to weigh development against preservation, as the beauty of this region is in the pristine state of its environment.”
Guyana has also been trying to attain full membership of the Extractive Industries Transparency Initiative (EITI), which is potentially at odds with non-disclosure of the terms of the ExxonMobil Stabroek block contract.
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