The cart is placed in front of the horse
Kaieteur News – Social media site OilNow reported that the Minister for Natural Resources had told the National Assembly that the Department of Energy will be turned into a professional technical unit to manage the oil sector and that the Petroleum Department will be in the Geology and Mines Commission (GGMC) will be included in the Petroleum Commission.
The shocking revelation after it was made received very little attention. But it does highlight the complete confusion that exists under the PPP / C in the oil and gas sector.
In August last year, Vice President Bharrat Jagdeo said more or less the same. He also said that the Petroleum Commission will be appointed in six months time. Well, in six months a lot of things can happen.
Many things have already happened. A questionable review of Payara Field Development Plan has been conducted and is being treated as top secret. Payara is government approved. Exxon has started drilling in the Canje Block. Yet the government cannot find the time to issue the Order bringing the Petroleum Commission into existence.
The Petroleum Commission Bill was passed by the Coalition Government. The Bill provides for the Minister responsible for oil and gas to become the Petroleum Commission.
The APNU + AFC was not advised to conceive a Commission with regulatory powers as well as the authority to implement policies and advise the Minister at the same time. In the Natural Resources sector, international best practice suggests that it is conflicting to have a single body as regulatory authority, policy making authority and operating branch.
The PPP / C wants the Petroleum Commission to include the functions of the Department of Energy and the oil and gas aspects of the work of the Ministry of Natural Resources. The functions of the Petroleum Commission are similar to the Public Utility Commission being part of the Ministry of Telecommunications. He cannot be expected to monitor himself.
But this is exactly what the Petroleum Commission envisages. The Commission will be required by law to “monitor and regulate the exploration, development and production of petroleum in Guyana efficiently, safely, effectively and environmentally responsible.” However, the law goes on to extend the Commission’s functions beyond regulation and monitoring.
Under the Petroleum Commission Act, the Petroleum Commission also has an advisory and executive role. He is expected to advise the Minister and promote government policies. Therefore it cannot be considered an independent regulator. He is also expected to implement government decisions and ensure compliance with the conditions.
Judging from the statements made by reports from the Minister for Natural Resources, the government has no intention of separating these functions. Like the APNU + AFC, the PPP / C government wants to put the Commission under its thumb.
This is contrary to the advice given three years ago by former Trinidad and Tobago Energy and Energy Affairs Minister Kevin Ramnarine. He has urged the Commission to be separate from the Ministry of Natural Resources.
Five months into office, the PPP / C is still thumbing the Commission’s question. It has yet to bring in any legislation to amend the forgotten Petroleum Commission Act, and even if it does, it is unlikely to loosen its grip on the control it intends to exercise over the Commission.
The PPP / C has not yet brought the Commission into existence. And it is likely to exercise the greatest delay in doing so. He says he will bring the revised Petroleum Commission Bill but interestingly he wants to do this once he has developed a Local Content Act. This puts the cart before the horse because the Commission will have to oversee Local Content Law.
The absence of the Petroleum Commission gives the PPP / C a free boost to grant licenses, and without the regulatory oversight. The game of the PPP / C is clear – control, control, control. Without the Commission the PPP / C can do as it pleases.
Without a Commission, there is no pressure to develop a Depletion Policy. And without a Depletion Policy, those with interests in the Canje and Kaieteur blocks will be safer because they know they have a government in place that will not limit the rate of oil production. And this will be to their advantage in selling buying rights into their blocks. The lack of an Exploitation Policy effectively helps the block owners make a fortune for an asset for which no signing bonus has been paid.
(The views expressed in this article are those of the author and do not necessarily reflect the views of this newspaper.)