Petroleum Commission can more than regulate the oil and gas sector

Sep 01, 2022 News

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…plays integral role in centralised management, oversight

Kaieteur News – Despite conversations about the importance of an independent controller in the oil and gas sector, that being a Petroleum Commission, Guyana remains without one even as the body can perform various functions that will ensure the best results for Guyanese in the development of the resource. As clarifications are being sought about the country’s ability to monitor cost and to have a say in spending, the Commission is being highlighted as another mechanism, once in place, can help the country monitor and manage the industry.

Just two weeks ago, Vice President Bharrat Jagdeo told the media that Guyana does not have a co-management agreement with Exxon Mobil and partners and thus, the country is only left with oil and gas expenses after the oil companies would have done the spending. Because there is no co-management arrangement between the country and the oil companies, the Vice President said that Guyana is not involved where spending is concerned.

Regarding the Petroleum Commission, Jagdeo said in August of 2020 that it would set up within the next six months. Almost two years later in April of this year, the Vice President agreed that the Commission is critical to any government’s regulatory architecture, but stated that it would not be a safeguard against corruption and that is was still on the cards for the administration. Jagdeo added that the Petroleum Commission simply ensures that all payments for the sector are properly accounted for, that key financial documents are not hidden and licences that are awarded are made public; something he said the government already does. The Vice President had agreed further that the Commission’s regulatory oversight role is important and thus noted the administration’s quest to find the right model, one where the Natural Resources Minister does not have absolute power over the Commission as proposed by the previous government.

Contrary to the Vice President’s statement, the Petroleum Commissions can nonetheless perform various functions as designated by the necessary legislation. After discovering petroleum in 2007, Ghana for example, established its Petroleum Commission four years later with a mandate “to regulate, manage and co-ordinate all activities in the Upstream Petroleum industry…” Its functions entail importantly, to analyze petroleum economic information and submit economic forecasts on petroleum to the Minister; to receive and store petroleum data, manage a national petroleum repository and at the request of the Minister, undertake reconnaissance exploration including data acquisition; assess and approve appraisal programmes; advise the Minister on matters related to petroleum activities such as field development plans, plans for the development of petroleum transportation, processing, and treatment facilities, decommissioning plans for petroleum fields and petroleum infrastructure; monitor petroleum activities and carry out the necessary inspection and audit related activities that include “any other function related to the object of the Commission or assigned to it under any enactment.”

In its analysis of the 2011 law, the Offshore Journal described the Ghana Petroleum Commission as having functions that extend beyond that of any other regulatory body in Ghana. “It is a supra-national regulator with diverse powers, which stem from its tripartite role. In addition to being a regulator in the technical sense, the Commission is also the manager of Ghana’s petroleum resources, and as coordinator of policies in relation to them, the Commission acts as the interface between the government and industry.” Government agencies and departments are required to cooperate with the Commission.

The Norwegian Petroleum Directorate is a governmental specialist directorate and administrative body. Established in 1972, it reports to the Ministry of Petroleum and Energy. With the same functions as a Petroleum Commission, that body’s duties include being an advisor to the Ministry of Petroleum and Energy. It has a “national responsibility for the data from the Norwegian continental shelf. Our data, overview and analyses constitute a crucial factual basis on which the activities are founded. It said it is the driving force for realising the resource potential by emphasising “long-term solutions, upside opportunities, economies of scale and joint operations, as well as ensuring that at times – critical resources are not lost.”

That body said it “sets frameworks, stipulates regulations and makes decisions in areas where it has been delegated authority. Further, we are responsible for conducting metering audits and collecting fees from the petroleum industry.” The body also contributes to “administrative competence, mapping of resources and petroleum data administration.” It has about 70 teams with designated mandates and the teams are delegated authority for products, processes and quality.

It was noted in the 2019, US$20M World Bank loan document that Guyana had completed, independently and with donor support, a review of the existing oil and gas sector governance structure and had legal and policy drafts in place including an oil and gas policy (2016), local content policy (2017 & 2018), the “Petroleum Commission Bill” (2017 & 2018). It said in December 2017, the Ministry of Finance had requested the US$20M Credit from the World Bank “aimed at supporting broad governance reforms of its O&G sector with the objective to address economic and social impacts.”

 

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