BY NAN BUSINESS EDITOR
News Americas, NEW YORK, NY, Fri. Aug. 11, 2023: In a significant development, Guyana’s parliament has approved long-awaited oil legislation that empowers the country’s Natural Resources Minister with substantial authority over its multi-billion-dollar oil industry. The new regulations will be applied to forthcoming projects in the South American nation, including an upcoming oil block auction set for the fourth quarter. Currently, all oil production in Guyana is led by a consortium led by Exxon Mobil Corp (XOM.N).
The National Assembly’s approval of the Petroleum Activities Bill marks the replacement of the outdated Petroleum Act of 1986, which had been the country’s primary oil legislation. The bill successfully passed through the assembly without amendments following an exhaustive seven-hour debate, now awaiting the president’s final approval.
Under the new legislation, Natural Resources Minister Vickram Bharrat will assume the role of overseeing oil operations. This includes the authority to grant exploration, production, and environmental licenses, whether acquired through competitive tenders or direct negotiations. The minister’s responsibilities also encompass enforcing the law and imposing fines, all of which will be subject to review by the nation’s cabinet. However, the bill doesn’t outline review procedures by regulatory bodies or exclusive parliamentary attributions.
Beyond the scope of the previous legislation, the Petroleum Activities Bill will regulate various aspects, including the transportation and storage of hydrocarbons from offshore to onshore, as highlighted by Bharrat.
Furthermore, the bill provides Guyana with the means to access oil feedstocks for potential future refineries. Minister Bharrat emphasized that this provision ensures that a refinery won’t become a stranded asset and that if the share of profit oil is inadequate, Guyana can purchase it from operators.
Since its first oil discovery in 2015, Guyana has rapidly emerged as the fastest-growing oil-producing state. With offshore fields estimated to contain around 25 billion barrels of oil, the country is gearing up to reach a production target of about 1.2 million barrels per day by 2027, exceeding the output of numerous OPEC nations.
Recently, Guyanese authorities inked an agreement with officials from the Dominican Republic to explore the establishment of a 50,000 barrels per day (bpd) refinery within Guyana. Simultaneously, the country is evaluating bids for an additional 30,000 bpd refinery.
Despite the legislation’s passage, opposition officials voiced concerns over the extensive powers granted to the minister and called for the establishment of a Petroleum Commission. However, the government, holding a parliamentary majority, dismissed these concerns as unnecessary.
Guyana’s Attorney General, Anil Nandlall, argued that the minister’s authority won’t be absolute, given the oversight of the cabinet and the government’s accountability to the parliament.
The drafting of the law involved consultations with several nations for guidance, including the United States and Trinidad and Tobago, as emphasized by the attorney general.
This legislation represents a pivotal milestone as Guyanese officials work to meet the September 12 deadline for the submission of bids in the country’s inaugural oil auction.