Guyana should adopt World Bank’s safeguard policies for oil sector now – Chatham House

Nov 18, 2018 News

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By Kiana Wilburg

Countries preparing for petroleum production are expected to set compliance standards for environmental impacts that may arise.
But it has been more than two years since Guyana is preparing for the burgeoning oil sector and the coalition administration is yet to put these measures in place.
This was recently pointed out by Chatham House, a not-for-profit organization based in London. Its mission is to analyze and promote the understanding of major international issues and current affairs.
Even though the government has blamed several factors for the sloth in this regard, Chatham House is of the firm view that there are internationally recognized policies designed by various development partners, which Guyana can begin to implement now.
On this premise, the transparency body said that Guyana’s authorities should lend serious consideration towards implementing the World Bank’s safeguard policies for the oil sector as they are directed at the identification and mitigation of potentially adverse environmental and social consequences of petroleum projects.
Chatham House said that the Bank’s policy and performance standards on social and environmental sustainability for the oil sector are also used by nations which have been successful in the oil and gas sector.
Additionally, Chatham House said that the World Bank’s safeguard policies have become the global benchmark for managing environmental and social risk by financial institutions.
“Apart from the World Bank’s policies, Guyana can also make use of a series of International Standards Organization (ISO) standards on environmental management, including the highly influential standard ISO 14001 Environmental Management Systems.
“These standards have been widely adopted by national standards organizations. Although voluntary, they can serve as a reference point for the definition of good practice in oil, gas, and even mining activities.”
Chatham House added, “It is important to note that compliance standards in the oil and gas sector are most effective when they are achievable and set in line with good international practice. If they are unrealistically strict, the risk is that they will become meaningless given the institutional capacity limitations of most developing countries.”
Equally, if they are too lax, the globally revered institution said that good enforcement will not accomplish very much. Chatham House said that indeed, it is the lack of effective enforcement that is the key issue in the regulation of the oil and gas sector. It stressed that the best results are achieved when compliance standards are well set and the capacity to implement them is put in place specifically before oil production takes place.
UPDATING THE EPA LAWS
Over the last two years, there have been criticisms that the regulations and laws governing the work for the Environmental Protection Agency (EPA) are inadequate and perhaps, outdated for the burgeoning oil and gas sector to come.
But EPA Head, Dr. Vincent Adams, has said that he is not opposed to such viewpoints. In fact, the Environmental Engineer said that it is a priority area for him while adding that all laws and regulations will be in order before the petroleum sector gets going.
During an exclusive interview with Kaieteur News, Dr. Adams said, “There is no question when it comes to updating the laws. In fact, I have asked my staff members to get all the information on that for me on what exists today and try to baseline what we have, which includes environmental laws and regulations. Unfortunately, we can’t stop operations but we have to try and fill in the gaps as we go along and improve where there is need to improve because all operations have to be safe and environmentally sound.”
Dr. Adams also explained that he is working towards a list of all permits to see which ones are in compliance and those which are due for renewal. He said that this is part and parcel of the transformation to take place at the EPA.
Carlos de Regules, the founding Director of Mexico’s Agency for Security, Energy and the Environment (ASEA) is also a proponent for the EPA’s laws and regulations being reviewed and updated. During an interview with this newspaper, Regules stressed the importance of Guyana strengthening the regulations in this regard. He also called for Guyana to strengthen the overall capacity at the EPA.
“Guyana has a very special and professional team at the Environmental Protection Agency and with new leadership too which is very timely. Its new head, Dr. Vincent Adams, has astounding experience in the oil and gas industry and those are a few perfect elements for success. I believe that Guyana is already paying some attention to the EPA but the greater focus will take Guyana to where it needs to be.”
The Mexican advisor added, “The Government should not lose visibility of the EPA because it is a key element of oil and gas success. Yes, you have to get the contracts right, you have to get the bidding rounds right, but you must get safety and environmental protection right…And I think they (EPA) are ready for being transformed into a new and innovative institution that incorporates a new mandate for safety.”
Regules asserted that it is also imperative for the EPA to be able to collaborate with the newly created Department of Energy and that they are able to work together to produce an integral regulatory framework where environment and safety concerns are part of the strategic decisions being made for the oil and gas industry.
The founding Director said that Guyana’s regulator for the environment will need to have a firm understanding of the oil and gas business as well as the willingness to be robust with operators. He noted that this will come with training and Mexico is ready to help in this regard.
BEING ROBUST AND INDEPENDENT
A robust and proactive regulatory body is a central part of the institutional framework needed for a petroleum sector. But if this authority is to do its job effectively, it must be independent. It must be free from any instance of political interference. This point was also made pellucid by ASEA’s Executive Director.
In an interview with Kaieteur News, Regules said, “You have a very interesting situation in Guyana. You are at the beginning of a new moment in history. The country is going to move from being dependent on certain economic activities and it is going to become a regional hub; a very important place for oil and gas in the region. And Guyana has an opportunity to make it right from the start because you have a clean sheet of paper for this sector.”
The Executive Director of ASEA continued, “So before achieving full-scale development of the oil and gas resources, Guyana has the opportunity to create an institutional framework that makes the sector stakeholders operate in a responsible manner…”
The Mexican official added, “But I can’t stress enough that one of the ingredients of this institutional framework will be astute and honourable regulators. One of the characteristics of a good regulator is independence.
“You want regulators who are defining the rules for the long run, to be independent of the political cycle. They should also be financially independent so they can plan for the long-term and have the resources to do so.”
The Oil and Gas Expert said that the sooner Guyana can have strengthened systems for environmental regulation in place, then it would be better off in terms of managing the sector.
Regules said, “The sooner you are able to provide the rules of the game then the sooner oil and gas investors will be able to make investment decisions that are based on a sound regulatory framework.”
In addition to this, the Executive Director of ASEA said that the Government would be able to provide the people of Guyana with the certainty that there are regulators and institutions in place that will take care of their interest.
Regules concluded, “It is a good moment for Guyana but don’t wait too long to regulate it.”
Guyana’s Environmental Protection Agency has faced criticisms from various sections of society, all of which highlight the fact that it is unprepared to deal with the challenges of an oil sector. EPA’s laws are not only outdated in several respects but fail to address the needs of a demanding oil industry.
The Authority also lacks the capacity to properly review Environmental Impact Assessments (EIA) for oil companies. In fact, it had to leave the evaluation of ExxonMobil’s EIA for the Liza Phase Two Project in the hands of another foreign company.
The contract for that project was awarded several weeks ago.

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