Trotman says Guyana is ready for First Oil; Ramson takes him to task

Aug 28, 2019 News

Many experts have waxed about Guyana’s unpreparedness for oil production, but Minister of Natural Resources, Raphael Trotman, has a different opinion; that Guyana is ready, and that it has done a commendable job getting there in a very short period.

Attorney-at-Law, Charles Ramson Jr.

Minister of Natural Resources, Raphael Trotman

During a Mining Week event at Pegasus Hotel on Monday, Trotman, in highlighting Government’s achievements in the extractive sector, said “We have ensured readiness for first oil in a record-breaking 48 months.”
This statement is sure to ruffle a lot of feathers, as there are many provisions that have been advocated for by critics, that aren’t yet in place. That’s likely because Guyana is moving from first discovery to first oil production in a very short period.
Speaking to Kaieteur News yesterday, Attorney-at-law Charles Ramson Jr., said that it’s unbelievable that the Minister would make such a statement.
Only recently, Ramson, who is the Head of the Georgetown Chamber of Commerce and Industry (GCCI)’s petroleum committee, spoke at an event about the need for a strong local content plan to ensure Guyanese participate fully in the oil and gas sector.
“Are you kidding me?” Ramson said. “No local content legislation is in place.”
It was only last week that the GCCI held a roundtable discussion to discuss the third draft Local Content Policy, which by the way, has no provisions to penalise oil companies for failure to adhere to its targets.
On another front, Ramson lamented that Government doesn’t have the capacity to audit costs.
“We can lose millions from inflated costs.”
There are concerns about Guyana losing revenue from inflated costs, which oil companies have to recover. Just yesterday, Kaieteur News reported that Guyana is paying, through cost recovery, uncapped interest rates on loans taken by the operators of the Stabroek and Orinduik Blocks. Earlier this year, the International Monetary Fund (IMF) advised Government to get clear definitions of eligible costs and to conduct routine audits to maximize revenue. Ramson had explained the need for specialised accountants to verify cost claims made by oil companies.
He also criticised that the Natural Resource Fund Act, which was passed earlier this year, was not debated in Parliament. This was due to the fact that it had been passed after the Government was defeated by a vote of no-confidence on December 21, 2018, and the Political Opposition, the People’s Progressive Party (PPP) refused to go back to Parliament, citing the motion.
Poor contract terms, inability to regulate, and lack of capacity to audit costs are just few of the issues that plague the Department of Energy and its partner public actors with responsibilities to the petroleum sector.
Government has fielded criticism from the opposition for not yet amending the Petroleum (Exploration and Production) Act. That is holding back the Department of Energy from going forward with public bidding of oil blocks, as its Head, Dr. Mark Bynoe said that bidding will not be done until the legislation is brought up to date.
Ministry of Natural Resources, Raphael Trotman, recently said that an expert review has been done of the act. It is unclear when amendments will be made.
Government has indicated in the 2019 Half-year report, that it is prioritising several institutional strengthening requirements of the oil sector in its preparations for budget 2020, to build capacity for certain public institutions with regulatory roles in the industry. In this regard, institutions such as the Guyana Revenue Authority, the Department of Energy and the Civil Defence Commission are expected to build their capacities for cost audits, the designing and negotiation of production sharing agreements, and oil spill management and preparation, among other areas.
The report had noted that an inter-Ministerial Committee on Petroleum (IMTCoP) was established in 2017 to coordinate public sector actors that have a role to play. It is through IMTCoP that Government has indentified more than 70 areas for strengthening, across nine institutions.
Those plans are yet to unfold.

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