Latest update November 26th, 2024 1:00 AM
Seven years on…Guyana still to protect self from being cheated on oil revenues
– Former Finance Minister Jordan acknowledges flaws in Exxon contract
Kaieteur News – Former Finance Minister, Winston Jordan has acknowledged that in hindsight, there are certain provisions in the Stabroek Block Production Sharing Agreement (PSA) which could have been better negotiated. Be that as it may, he is of the view that seven years after the discovery of oil, Guyana is yet to be fully armed with the insti
Former Finance Minister, Winston Jordan
tutional and legal instruments needed to ensure it is not being cheated on its oil revenues.
During a recent online interview, the former Minister said,“…there were a number of things in the contract that could have been better negotiated and so forth but having said that, you have in front of you a contract. Now you can run on two parallel tracks, on one you can seek to get the contract renegotiated but on the other tract you must run on given what is in there.”
Jordan continued, “You have to ensure that you are not cheated even within what you have signed up to get and I think in that regard, we are not doing a very good job because seven years after oil has been found we don’t have in place, I believe, not even maybe 10 percent of the legal, regulatory, human and other factors in place to ensure that in terms of what is in the contract, we get every ounce of it even as we move or attempt to get renegotiation…”
The former Minister’s comments are also in sync with the findings outlined in a key report by the World Bank which outlined that the shortage of oil-sector experts in relevant government entities, combined with inadequate human and capital resources, limits the country’s ability to monitor, audit, and enforce regulations on oil companies.
Further to its call for the relevant experts to be put in place, the financial institution said the international experience for oil producing states reveals that successfully managing the sector requires the transparent and accountable implementation of robust policy and institutional framework composed of five core elements. It said these include: (i) policies, laws, and contractual arrangements that maximize the benefits of oil revenues and minimize downside risks; (ii) a set of regulatory institutions capable of effective oversight; (iii) appropriate fiscal policies and sound public financial management (PFM) infrastructure; (iv) robust revenue management and distribution mechanisms; and (v) policies to promote sustainable long-term development. Although Guyana has made substantial progress in strengthening the management of the oil sector in the said areas outlined, the international financial institution that provides loans and grants to the governments of low- and middle-income countries outlined that further measures are desperately needed to align the country with best practices. It stressed, in the same way other stakeholders have done for the last six to seven years, that legislative modernisation will help maximise benefits, manage technical, environmental, social, and financial risks, and build capacity to engage effectively with investors. At present, the key laws governing the sector include the Petroleum (Production) Act of 1938, the Petroleum (Exploration and Production) Act of 1986 and related regulations, and the Upstream Legal Requirements for Petroleum (2004).
These instruments, along with the Guyana Geology and Mines Commission Act, the Mining Act, the Environmental Protection Act, the Occupational Safety and Health Act, and other relevant pieces of legislation, are yet to be adjusted to reflect that Guyana is no longer a frontier but instead a proven oil producer.
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