No new policies for the oil sector in the 2021 budget
By Kemol King
Senior Minister in the President’s Office with responsibility for Finance, Ashni Singh.
Kaieteur News – The Senior Minister in the Office of the President with responsibility for Finance, Dr. Ashni Singh, 2021 budget for Guyana at a staggering $ 383.1 billion, but with no changes in the People’s Progressive / Civic Party (PPP / C) vision for the oil industry. The budget effectively builds on the manifesto promises that the party used to challenge the 2020 general and regional elections. These pledges are largely based on capacity building for monitoring agencies. The budget remains true to the opening speech made by the President, Dr. Irfaan Ali, the day before, made no promise to renegotiate the controversial Stabroek block production (PSA) contract or secure unlimited liability insurance for Guyana in the major cause of oil-scale disasters, such as oil spills.
Entitled ‘A Path to Recovery, Economic Dynamics and Resilience,’ the 2021 Budget largely deviates from mentioning oil, except to emphasize that the overwhelming focus being placed on the development of other sectors is to ensure that Guyana avoid falling prey to the resource curse. .
“We will continue to remember,” the Minister told the National Assembly, “of the need to avoid the dangers that have been the subject of many new oil and gas producers and many resource-rich countries, including Disease The Netherlands.”
In economics, Dutch Disease is a tendency for resource-rich countries to fail to manage their economies prudently because of a decline in most other sectors, caused by an over-reliance on the resource sector (s).
The government does not intend to make any major interventions in the management of the oil and gas sector to curb or curtail the aggressive development plans of ExxonMobil and its partners. Dr. Singh, as Vice President, Dr. Bharrat Jagdeo, said the administration is aggressively favoring exploration and production of Guyana’s oil, to beat the global transition to renewable energy sources.
“The window of opportunity to extract this resource is limited,” he said.
The government plans to create an environment that adheres to international best practices for running the oil industry.
“Since we started in the job,” he said, “we have found that the ability to manage the oil and gas sector remains highly underdeveloped to ensure efficient resource extraction and profit share maximize it. The previous government seems to have spent the last five years wasting time instead of making sure that every opportunity is taken aggressively to quickly equip our regulators to effectively protect our national patriotism. “
The following paragraphs effectively summarize the PPP / C plan for the petroleum institutional and regulatory framework in 2021.
Dr. Singh, “Mr. Spokesman, the Government is working to create a strong and robust institutional and regulatory framework to better manage activity in the sector, including: reform of the Petroleum Act; developing a model Petroleum Sharing Agreement model; exploring a revised petroleum financial regime; promoting the draft local content policy and associated legislation; and promoting the Petroleum Commission Bill.
Consistent with this outlook are inevitably the development of technical capability, the strengthening of oil and gas sector organizations and the collaboration with experts to achieve optimum results. These include agencies such as the Guyana Geology and Mines Commission and the Guyana Revenue Authority (GRA), which need to be adequately equipped to fulfill their respective responsibilities in the sector. “
The Senior Minister examined the government’s initiative for developing GRA’s ability to monitor the oil industry, noting, “Mr. As a speaker, GRA has continued to build capacity to address the unique and unique needs of the oil and gas sector. This has led to the establishment of a Customs Petroleum Unit (CPU) in the Department of Customs, Excise and Trade and the Department of Petroleum Revenue (PRD). Mr Spokesperson it is vital that GRA’s ability to monitor and audit the oil and gas sector is significantly increased. For the year 2021, there will be training in the areas of ‘Interpretation and Analysis of Financial Statements,’ ‘International Oil and Gas Financial Reporting Standards (IFRS),’ ‘Cost Recovery Procedures,’ ‘Computer Assisted Audit Equipment’ and ‘International Taxation. ” To effectively increase GRA’s capacity in light of the current dynamics of the economy, the allocation provided is $ 7.1 billion. ”
The Minister also spoke about the PPP / C Government’s plan for making Guyana’s energy sector sustainable and reliable, which includes the proposed gas-to-shore project.
“Guyanese are anxiously awaiting the prospect of offshore gas pipelines to generate cheap and reliable energy to power industry and meet our growing demand for electricity. Conceptualized as a 210 km pipeline to transport natural gas from Guyana by sea, the gas-to-power project will be the trailblazer to move Guyana’s path to domestic energy security within the next three years. This transformational project includes the establishment of a power station to generate up to 250MW of power, the establishment of an industrial park, including industries to support our agricultural and manufacturing sectors and the creation of a local LPG factory to cater for domestic and export demand. ”
Dr. Singh to start procurement for consultancy services for several studies that will inform the development of the onshore gas project. These were mentioned by the Vice President during a press conference last Tuesday.
“As we speak,” said Dr. Singh, “Consultancy services are being procured to carry out the geotechnical, geophysical, environmental, and Light Detection and Ranging (LIDAR) studies to determine the location at which the gas line would land as well as the sites for the drying facilities, co-production machines, and essential petrochemical industries. Construction of the co-production plant and pipeline installation will begin next year and finish in 2023. ”
He expects when the work flows, the cost of electricity will be significantly lower than the current rate. The administration also expects that the fall in the cost of electricity will attract large industrial, agro-processing and manufacturing companies.