Foreign investors not worried about elections outcome - major parties share similar policies on oil

Foreign investors not worried about elections outcome – major parties share similar policies on oil – Experts

Feb 23, 2020 News

Experts share similar views on major parties and their approach to the oil sector. They say that investors are unconcerned about the outcome of the March 2, 2020 general and regional elections.
Why? Because, no matter who wins, there will not be a si

Chatham House Associate Fellow, Valérie Marcel

gnificant change in policy where the energy sector is concerned.
Take Valérie Marcel, for instance. Marcel is an Associate Fellow in the energy, environment and resources programme at Chatham House, also known as Royal Institute of International Affairs.
In a February 21, 2020 publication of Energy Advisor, titled ‘What’s at Stake for Guyana’s Oil Sector in the Elections?’, Marcel is asked about the Guyana elections.
In her response, Marcel said that the stakes are high in the election, as Guyana has just begun producing oil, and that the winning party will reign over the country’s oil revenues. She added that there is “unique political opportunity for state building” once the winning party ensures the wealth gained from the production and sale of Guyana’s oil is equally distributed amongst Guyana’s various groups.
She expressed the risk that there could be developed clientelistic networks based on ethnic and party affiliation. Pointing out President David Granger’s ‘Green State Development Strategy’, Marcel said that there is no significant departure from Granger’s policies in the People’s Progressive Party (PPP) manifesto.
For one, the PPP also supports the Extractive Industries Transparency Initiative (EITI), which Guyana is already a member of. Both parties also endorse a sovereign wealth fund. The only difference is that PPP general secretary, Bharrat Jagdeo, disagrees with the constitution of the current Natural Resource Fund. He has vowed to repeal and replace it.
The Economist’s Intelligence Unit (EIU) recently released its Country Report for Guyana’s 2020 first quarter.
In that report, the EIU stated, “Irrespective of who wins, no major policy shift is expected under a new government, especially in energy policy – a cause for concern for investors.”
The publication noted that Guyana is on the cusp of becoming a major oil producing nation, which will give the new government the opportunity to define the country’s development path.
“The new government will also gain huge popular advantage from the capacity to rapidly expand public spending and investment over the course of its term in office. Policy priorities will be to tighten anti-graft legislation and strengthen fiscal management and accountability.”
Still, the policy positions of both the major parties are essentially the same. Both parties have said that a new Production Sharing Agreement model must be in place before the next licensing round. The only difference is that the PPP intends for the new model to update most of the current agreements. The coalition has not pronounced on renegotiating any of the current agreements.
Though Jagdeo wants to renegotiate most of the current contracts, the biggest issue in the oil sector is the renegotiation of the Stabroek Block agreement, which Jagdeo has stated would be the exception, should his party win the election.
He has said that ExxonMobil should be rewarded for its “pioneering investment” in Guyana.
Both parties have refused to renegotiate the lopsided agreement. Both parties intend to draft and implement local content legislation.
Both parties intend to amend the Petroleum (Exploration and Production) Act.
If there is much nuance in their policies for the sector, it is unknown, as their manifestos have been limited in expansion on these issues.

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