Latest update April 11th, 2025 9:20 AM
Govt. mum on calls to extend two-week comments period on new model oil contracts
…as consultation enters second phase
Kaieteur News – The Government of Guyana (GoG) has so far ignored the calls from both civil society and the Opposition for the review period on the new draft Production Sharing Agreements (PSA) to be extended.
Two drafts, for the deep and shallow water areas, were released last Tuesday marking the commencement of a 14-day consultation.
Several members of the public had recommended that the consultation period be extended to cater for a thorough review of the agreements. This newspaper had reached out to Minister of Natural Resources Vickram Bharrat on Friday for his position on the calls being made, but received no response.
Minister of Natural Resources, Vickram Bharrat
Meanwhile, Stakeholder Coordinator for the Ministry, Ms. Mikaila Prince yesterday explained, “no change to the timeline has been communicated.”
The Opposition at its weekly press conference last week said the contracts should be laid in the National Assembly and be put before a special select committee that allows for the involvement of the Guyanese citizenry in the national conversation.
Similarly, environment and democracy advocate, Simone Mangal-Joly in a letter to Natural Resources Minister, Vickram Bharrat underlined the need for an extension to the consultation period.
She said, “Unlike government officials, citizens are not paid employees of the state and can only read such documents during their after-work hours. Fourteen days is also prohibitive when it comes to procuring qualified specialists to provide advice so that citizens and civil society organisations can make informed representation to government.”
Mangal-Joly had also suggested among other things that mechanisms be put in place for all comments on the new draft agreements be made public and for government to produce a plan to report on how public feedback was addressed in the development of the final model agreement.
Alfred Bhulai had also made a similar request to the administration.
The agreements that will govern the 14 oil blocks presently on auction has significantly improved terms for the country. In the new oil contract, government has preserved the right to review and approve the budgets for the exploration and development programmes of the oil companies. Such powers are not enshrined in the Stabroek Block PSA or any other existing PSA.
Equally important is the insertion of a new provision that ensures the country is not left on the hook for any of the oil companies’ bills.
A new arrangement or demand rather, is that oil companies must also ensure their subcontractors have adequate insurance coverage too.
Importantly, the draft agreements state that oil companies will not be allowed to acquire the blocks and sit on their hands for decades.
Unlike what obtains in the Stabroek Block PSA, the new draft agreements stipulate that the “contractor, affiliated companies, subcontractors and individuals who are expatriates shall be subject to the income tax laws of Guyana, including, the Income Tax Act of Guyana (Cap. 81:01) and the Corporation Tax Act of Guyana (Cap. 81:03) and shall separately comply with the requirements of those laws, in particular with respect to filing returns, assessment of tax, and keeping and showing of books and records.”
The new PSA has proposed that cost recovery be capped at 65 percent and introduces an increased royalty of 10 percent.
In announcing the release of the new model contracts, the Natural Resources Ministry explained that to ensure new investments are governed by a comprehensive framework of international best practices, there will be an overhaul of the 1986 Petroleum Act and Regulations.
Feedback on the draft model agreements should be addressed to the Minister of Natural Resources and sent to licensinground2022@petroleum.gov.gy with the Permanent Secretary copied, jmckenzie@nre.gov.gy.
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