Guyana preparing for oil and gas
GEORGETOWN, Guyana, – Vickram Bharrat minister for natural resources, says the failure of the coalition government to manage the oil and gas sector has left the PPP/C administration saddled with the task of preparing the country for the industry.
''We have seen many countries around the world – Libya is a
very good example – to show where countries prepared administratively for
production, although they were still in the exploration stage,'' the minister
said, addressing the twelfth parliament last Thursday. ''Guyana was quite the
opposite. We had a Government that was celebrating first oil, but was not
preparing us administratively to deal with first oil.''
Minister Bharrat referred to the 2016 Production Sharing
Agreement (PSA) signed between ExxonMobil, its partners and the former
government, which he said was ''lopsided.'' The minister said it is perhaps one
of the ''worst agreements in the history of the world.''
In that agreement the APNU+AFC government agrees to pay
ExxonMobil's share of taxes through Guyana's revenue share; ExxonMobil was also
given permission to recover uncapped interest rates on loans used to fund
developments; and a Stability Clause that sees Guyana compensating ExxonMobil
and its partners if any changes are made to the fiscal regime of the contract
that would result in losses. These are just three examples of hundreds of
provisions that leave Guyana open to significant value leakage.
The natural resources minister spoke in depth about the
government correcting the defects in the APNU+AFC's local content policy. The
policy was released in January 2020. The minister explained that the
implementation of the Coalition's local content policy depended on the
willingness of partners.
''It is just a policy on paper. The policy does not give
quantitative ration or percentage or required employment of persons, and/or the
use of Guyanese suppliers; no measures, no timeframe.''
The government is in the process of finalising its own local
content policy.
''Our Local Content Policy will benefit Guyanese and
Guyanese businesses. That is what we want; to ensure that the oil and gas
sector benefits every single Guyanese,'' the minister said.
Going hand-in-hand with an effective local content policy is
a workforce capable of offsetting the demands of the oil and gas industry.
The natural resources minister noted that over the past five
years, little was done to train Guyanese for the budding sector. He said the
government would be establishing a local oil and gas institute to train Guyanese
and other citizens in the Caribbean for the petroleum sector.
Minister Bharrat also said government is committed to
improving the Natural Resources Act. The Act governs the management of Guyana's
oil fund and how the money is spent.
The commitment is in keeping with the PPP/C government's
pledge to implement several measures to ensure accountable and transparent
management of the country's natural resources. This includes the establishment
of an arm's length Sovereign Wealth Fund (SWF) void and insulated from
political interference.
Minister Bharrat assured the National Assembly that
government will work assiduously to ensure that Guyana reaps the maximum
benefits from its petroleum sector in a prudent, transparent and accountable
manner.
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