Guyana helped develop 2016 Guidelines for Good Governance in Emerging Oil and Gas Producers, still mulling implementation.

Aug 22, 2021 News

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Kaieteur News – The Guidelines for Good Governance in Emerging Oil and Gas Producers 2016, compiled under the auspices of the New Petroleum Producers Discussion Group, review common challenges facing emerging producing countries in the phases of exploration, recent discoveries and early production.

The purpose of the Guidelines, according to Chatham House is to help emerging producers and the groups that advise them to think critically about the policy options that are available, and that would be most effective during the first stages of exploration and development, or during a restructuring of the country’s oil and gas sector. The goal is not to produce a complete guide to governance of the petroleum sector, but rather to offer guidance on making effective decisions about the structure and rules of the sector in an imperfect context. The Guidelines represent the consensus views developed among the officials from emerging producing countries who have participated in the New Petroleum Producers Discussion Group Workshops held at Chatham House in November 2012 and May 2014, Tanzania in July 2015, and Kenya in March 2016.
The Guidelines focus on eight key objectives for the petroleum sector in emerging producing countries. Specific, policy-oriented recommendations are included under each objective. Recommendations emerged from consensus views among the officials from emerging producing nations who participated in the discussion group meetings.
Objective 1: Elaborate a strategic vision for the sector.
Objective 2: Attract the most qualified investor for the long run.
Objective 3: Maximise economic returns to the state through licensing.
Objective 4: Earn and retain public trust and manage public expectations.
Objective 5: Increase local content and benefits to the broader economy.
Objective 6: Build capable national organisations to participate in and oversee the development of the resources.
Objective 7: Increase accountability.
Objective 8: Safeguard the environment.
For each of the aforementioned objectives, the Guidelines discuss specific challenges related to the national contexts that face many emerging producers. Furthermore, the guidelines have also highlighted several broad recommendations for addressing these challenges, both generally and within the context of each specific challenge. The general recommendations are as follows.
• International best practice may not be appropriate in the case of emerging producers in the oil and gas sector. Instead, the aim should be for more appropriate practice, taking account of the national context; more effective practice, in the interests of achieving rapid results; and better practice, allowing incremental improvements to governance.
• Government policy should be guided by a clear vision for the development of the country and a strategic view of how the petroleum sector will deliver that vision.
• In order to attract the most qualified oil company to a country with an unproven resource base, the host government can invest in geological data, strengthen its prequalification criteria and ensure transparency. It should also plan for success and anticipate the implications of hydrocarbon discoveries in its tax code, and be robust through declining oil and gas prices.
• Licensing is a key mechanism whereby government can reap early revenues and maximise long-term national benefits. Government must ensure that it simplifies both negotiations and tax structures to mitigate knowledge asymmetries with oil companies.
• Government and industry must engage and share information with affected communities to manage local expectations regarding the petroleum sector and build trust.
• In emerging producers, budgets for local content may be small and timelines for building capacity short. In this context, the focus should be on the potential for repeat use of any local capacity developed.
• Meaningful participation of national organisations in resource development is a central objective of many emerging producers. Capacity is needed to enable this.
• Incremental improvements to the governance of the national petroleum sector will allow emerging producers to increase accountability. The focus in this regard should be on building up capacity in checks and balances as resources become proven.
Despite these guidelines being finalised five years ago, Guyana has yet to implement a vast majority of the said guidelines. This publication will examine each objective and the associated challenges and recommendations in detail in subsequent articles.

 

 

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