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Oversight of oil companies is where Guyana’s focus should be – Chatham House Associate Fellow
By Kiana Wilburg
As Guyana continues its preparations for the oil sector, Chatham House Associate Fellow, Dr. Valerie Marcel, is of the firm view that focus should be on the oversight of oil companies.
Chatham House Associate Fellow, Dr. Valerie Marcel
Dr. Marcel made these and other remarks during her first appearance on Kaieteur Radio’s programme called Guyana’s Oil and You. There, Dr. Marcel said that Guyana needs to outline the rules by which the operators are to work. She said these have to be laid out along with having pellucid policies to guide the sector’s development.
The Chatham House Associate Fellow said, “So for example, what is Guyana going to do with the associated gas? What will it do about flaring and what are the rules for it? In some stances, there are rules, but the rules have to be better developed I think and then also, I would say building the institutions.”
Dr. Marcel said that in light of the size of the discoveries, there is certainly a justification for establishing a regulatory agency for the petroleum sector. This was supposed to be in the form of a Petroleum Commission but the legislation to bring it into being remains stuck in a Parliamentary Select Committee.
Dr. Marcel said it is important that Guyana beings to build the regulatory capacity needed for the oversight of costs as well as capacity within the Environmental Protection Agency (EPA).
“But it all takes time. It has only been five years and it is a lot to develop in such a short time, so kudos to Guyana for doing as much as it has. It is a big challenge, because Exxon is on a quick pace of development by industry standards and it is difficult for government to keep up and get all the agencies and policies up to date,” the Chatham House Associate Fellow stated.
While there is still much for Guyana to get done, Dr. Marcel was keen to note that the nation has done some things right. In this regard, she said that it has demonstrated that there is a vision for the use of the oil resources. Dr. Marcel commented that a vision is an important component in managing the sector, since the purpose for the resource is not in question. “So that is very good,” the Petroleum Governance Expert added.
In terms of revenue management, the official said that the Ministry of Finance has done good work, as it has laid out the rules for spending versus saving. She also lauded the creation of the Natural Resource Fund (NRF) which she deemed to be an important aspect of preparedness for the oil sector.
Moreover, Dr. Marcel was keen to point out that the authorities need to be mindful of the challenges that could come with spending the oil money. She alluded to the fact that Guyana has to ensure the right programmes for the effective spending of the money would need to be in place. She noted that there are several examples around the world, Timor-Leste being one of them, where the respective agencies were unable to spend the full budget they received. That only led to more issues. Dr. Marcel said that Guyana may very well face this challenge; and therefore, preparations to guard against this would be prudent.
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