Over 20 years later…Guyana still without Chief Inspector for Oil and Gas sector – Ram

Sep 03, 2017 News

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Guyana is yet to see the appointment of a Chief Inspector of the Oil and Gas Sector, even though this is one of the key requirements outlined in the nation’s Petroleum Laws. This state of affairs has existed for over 20 years.

Speaking to this matter in his recent writings, Attorney-at-Law, Christopher Ram said that there is a requirement, that the Minister must designate a public officer or any employee of the Guyana Geology and Mines Commission (GGMC) as Chief Inspector. The Minister must also designate any such number of public officers or employees of that Commission, as may be considered necessary for the purposes of the Act, as Inspectors.
Ram outlined that such appointments are required to be published in the Official Gazette. Based on his research, the last person who was so appointed was Mr. Brian Sucre. That individual died several years ago.
The columnist said that the seriousness of this matter lies in the fact that the Chief Inspector is the person with direct responsibility for the administration of the sector; to manage the oil companies, so to speak.
He pointed out that the last Administration failed to do so for around 20 years, and cannot use as an excuse, that oil was not a big deal then.
“After all, thousands of hectares of potentially mineral-rich resources offshore were given out to oil companies which by law, should be supervised by the Chief Inspector and inspectors appointed by the Minister. The exploration phase is admittedly light on expenditure, but it does give operators exclusive right to carry out prospecting activities in the blocks for which they receive a prospecting licence.”
The Chartered Accountant noted that it was therefore careless in the extreme that even after the establishment of a Natural Resources Ministry, the PPP/C made no such appointment. He noted that this of course, gave the Natural Resources Minister extensive influence over the oil operators.
Ram added, “Then came the APNU+AFC Coalition which has also failed to act, a full two years after a significant oil discovery, with the likelihood of more to come.”
The Attorney-at-Law noted that the importance of the role and functions of the Chief Inspector is set out in the nation’s Petroleum (Exploration and Production) Act.
For purposes of the Act, Ram said that the country is divided for purposes of licensing and exploring for petroleum products. He said that it begins with the preparation of a reference map of the geographical area of Guyana divided into blocks. The geographical coordinates and size of every block are also indicated on the map. The map must be published in the Official Gazette, placed at any office specified by the Minister, and forms part of the Regulations. It is the Chief Inspector who is the certifying authority for the maps. In other words, Ram said, he is involved right up front.
The Chief Inspector also keeps a register with the names and addresses of all licensees. The register must also record any interests in or affecting a licence. An application for any transfer of a licence made to the Minister has to be made to the Chief Inspector.
The operator must also furnish the Chief Inspector with a vast amount of information as the exploration moves through its various stages, including notification prior to the commencement of drilling of any well of seismic or other geophysical survey: a detailed report on the technique to be employed; estimate of the time to be taken; the material to be used, and the safety measures to be employed.
The Chief Inspector also has responsibility for ensuring that the operator maintains a local address of which the Chief Inspector is notified, full and accurate records containing full particulars of: the drilling, sidetracking, operation, deepening, plugging or abandonment of wells; the strata and subsoil through which wells or sidetrack holes are drilled; the casing, stating the type, joint numbers and lengths thereof inserted in wells, any alteration to such casing and the cementation of such casing, among other things.
The licensee also has to notify the Chief Inspector of full and accurate accounts of quantities of any crude oil and natural gas won and saved; their grades and gravity; the quantity disposed of by way of sale or otherwise; the consideration received; the name of the person to whom any such quantity was disposed of; the quantity consumed for drilling and other production operations; the quantity refined on his behalf in Guyana; the quantity treated in Guyana and the quantity flared. And such information is not limited to oil, but also to liquefied petroleum gases; sulphur or any other minerals; and any other gases, liquids or solids, etc.
Ram emphasised that these functions ought not to be taken lightly. He said that if the Chief Inspector does his work diligently, the legitimate concerns being expressed might be minimized. He said it is important to note that the functions cover the entire range of activities from exploration to production and extends to termination as well.
“In fairness, it does appear that the Commissioner of the Geology and Mines Commission carries out these functions in the absence of the Chief Inspector. The problem is what if a court matter arises and a litigant challenges the right of the Commissioner to exercise any of the functions or power of the Chief Inspector.”
The Chartered Accountant noted that even though there are lots of deficiencies in the existing legal framework, at least efforts must be made to ensure that the existing framework is applied and enforced.

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