Latest update December 23rd, 2024 3:40 AM
Any National Oil Company must be lean, clean, with strong parliamentary oversight – Oil Expert urges
By Kiana Wilburg
Kaieteur News – If established, what can a National Oil Company (NOC) do for Guyana in the most useful manner over time? This is perhaps one of the key questions the oil producing state must consider, says one of the world’s leading authorities on NOCs, Dr Valérie Marcel.
Chatham House Fellow and Industry Expert, Dr. Valérie Marcel.
In an exclusive interview with Kaieteur News, the expert on national oil companies, and petroleum-sector governance, was keen to note that the drivers for establishing a NOC are different today from 10 or even five years ago. Dr. Marcel, the Project lead for the New Producers Group, a South-South knowledge-sharing network of 30 emerging oil and gas producer countries (Guyana included) said the threshold to justify that investment of public funds is also higher. Dr. Marcel said, “In an energy transition, it is important to think about how the mandate of the NOC can adapt to a world of declining value of petroleum assets. What can the NOC most usefully do for Guyana over time? That is the key question.”
She added, “Marketing of the state’s share of crude is one useful role in the medium term – provided it has the necessary capacity (not a given as it has taken years to develop those skills in other NOCs).”
The industry expert proffered as well that another might be to leverage the petroleum operations to increase access to clean energy for Guyana. In the medium term, Dr. Marcel said it can be a passive upstream player. She said however, “It would be taking on a lot of risk as it would be committed to contribute to the costs of development of the fields without a guaranteed return on investment over time.” In all cases, Dr. Marcel said any NOC for Guyana needs to be lean and clean, with minimal costs and strong parliamentary oversight.
Vice President, Bharrat Jagdeo during several press conferences this year, explained that the government is weighing the pros and cons of developing a NOC, stressing that the traditional model (where the State owns the company and gets involved in the exploration and development of oil and gas) is not likely to be the intended route for the country. Should it settle on establishing such an entity, he indicated to the media that Guyana would play a passive role where a strategic partner, one with deep pockets and experience in the deepwater play, would be able to take the bulk of the risks. The former Head of State and now Policy Advisor for Oil and Gas said a decision on the way forward would be announced in September, the same time the country is expected to host its first oil blocks auction. Kaieteur News previously reported that development partners such as the International Monetary Fund (IMF) had advised against the country having a NOC, saying there was no business case for one. Other stakeholders such as former Petroleum Advisor to the coalition regime, Dr. Jan Mangal and Co-Director for Energy at Americas Market Intelligence (AMI), Arthur Deakin agreed with the IMF. They believe Guyana would be off on the wrong foot as it lacks the expertise to truly maximize the benefits of such an entity as well as the governance systems to keep corruption at bay. Vice President, Jagdeo has nonetheless assured that the government has a team of experts it is seeking guidance from while adding that the best decision would be made for Guyana.
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