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World’s fastest growing economy managing its US trillion dollar oil sector with 37-year-old laws

May 22, 2023 News

– still to finalize oil contracts before bid round

Kaieteur News – Would you believe that one of the most important oil producing countries of this decade is managing its petroleum sector with laws that are 37 years old? That country is Guyana. Its Petroleum (Exploration & Production) Act has been around since 1986, and has only been subject to minor amendments. The government had said, when it released the draft model petroleum agreements that an amendment of the Act is needed to ensure the bid round is lawful.

The government is expected to publish a draft of its proposed amendment of the law, for consultation. Based on comments received, the government may revise the draft, before taking it to Parliament for review by its members. A debate is expected in the lead-up to a vote. The government did not say when it would publish the draft. But it plans to do this before it concludes the offshore bid round which is in the third quarter of the year.

The government is also expected to ask the Parliament to approve an amendment to the Corporate Tax Act to include a 10% income tax for companies operating under the agreements to be issued in the bid round. The government had launched the offshore licencing round since December 2020. Six months later, it is also yet to finalise the model production sharing agreement (PSA).

After the Ministry of Natural Resources first published the draft model agreements for the deepwater and shallow water contracts in March, and it had initially opened up a two-week comments period. However, after criticism about the short deadline, Vice President, Dr. Bharrat Jagdeo said the government would continue to accept comments past the initial comment period.

Government was actually initially supposed to finalise and publish the model contracts by March 8, but revised the schedule to indicate that it would publish the final models in April. Today makes three weeks into the month of May. No investor can make an informed decision about whether to tender a bid if it does not have all the information about the final terms it will have to operate with, as well as the legal regime. This means the update of the Petroleum law and the contracts are critical.

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