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BREAK NECK SPEED ! Guyana beats industry approval rate for gas projects by 11 years – Rystad official
By Davina Bagot and Kiana Wilburg reporting from Trinidad & Tobago
Kaieteur News – On average, a gas discovery takes around 15-plus years to reach production. American oil major, ExxonMobil however was able to acquire approval to start up the largest-ever financial initiative pursued by Guyana within a record four years.
This has made the new oil producer a perfect example of a nation that has wasted no time in accelerating the development of its gas resource. Rystad Energy’s Senior Vice President and Head of Latin America, Shreiner Parker during a presentation on Tuesday at Trinidad and Tobago’s Energy Conference, hosted at the Hyatt Regency, put this into perspective for over 700 delegates.
Parker was at the time presenting on Trinidad’s gas production and the future of the sector on the global market. While Parker did not highlight the risks associated with a faster approval process, he did lament the benefits to be had from a financial perspective.
In offering his advice to the Twin Island Republic, the Rystad Executive said that Trinidad should possibly improve terms further to sustain and grow its hydrocarbon output; provide better domestic prices for gas – as the current price domestically renders projects not very lucrative. He also said that Trinidad and Tobago should aim to increase international participation as this could improve the chances of success in exploration.
Moreover, Parker outlined that the Republic should reduce the time spent on approvals. “On average, a discovery takes around 15 plus years to reach production. Guyana achieved this in four years. Trinidad being a legacy producer needs to aim at encouraging fast-tracked developments to sustain supply.”
Rystad Energy’s Senior Vice President and Head of Latin America, Shreiner Parker during his presentation at the T&T Energy Conference
Even though he compared Trinidad to close to a dozen other hydrocarbon-producing states in his presentation, Parker singled out Guyana as a model for fast-tracking the approval process. He told the T&T Energy Conference that Guyana is a “unique case” with a “unique producer” operating in the petroleum sector.
The People’s Progressive Party (PPP) government in Guyana since taking office in 2020 made its position clear that it intends to accelerate production activities offshore. In fact, it has since taken several steps to ensure this is achieved to maximize profits from the sector.
A 2022 Report by IHS Markit has flagged the Government’s control of state agencies, particularly those responsible for the management of the oil sector, as being a means of fast-tracking and facilitating project approvals in the oil and gas sector.
The document titled ‘Guyana aims to strengthen institutions to avoid petro-state pitfalls’ noted that though the country’s upstream regulatory and management responsibilities are dispersed across different state entities, the current institutional arrangement places these entities under the full control of Guyana’s executive branch.
The President is tasked with appointing the leadership of the Ministry of Natural Resources as well as other agencies with jurisdiction over the oil and gas sector. “This situation appears to have resulted in decision-making leeway that has generally facilitated project approvals thus far,” the report states.
Meanwhile, as the integrity of Guyana’s environmental regulator remains under question, the Minister of Natural Resources, Vickram Bharrat has made it clear that the government had to take steps to make the granting of permits easier, to allow the free flow of business and revenue in the country.
In May last year, the Minister said this was the case at the Environmental Protection Agency (EPA), the Central Housing and Planning Authority (CH&PA) as well as the regional authorities, such as City Hall.
“We had to ensure that the permitting process was not as cumbersome or not as tedious as it used to be in the past without jeopardizing the integrity or without compromising anything to ensure we fast track the approval of development coming to our country.”
This however, may have significant economic and environmental consequences for the country as was highlighted by several stakeholders in the past.
Notably, Guyana’s Gas-to-Energy (GTE) project pegged at US$2 billion has not been subjected to thorough feasibility and environmental studies.
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