Latest update December 16th, 2024 9:00 AM
Oil companies can defer or make part-payments of royalty to Guyana – draft oil law
Kaieteur News – The 10 percent royalty that the Government of Guyana (GoG) will be seeking from oil companies operating in the 14 new oil blocks on auction will be given an opportunity to defer these payments to a later date, or make a part-payment.
This is provided for in the new draft Petroleum Exploration and Production Act, released by the Ministry of Natural Resources on Monday evening. The draft legislation will replace the 37-year-old law, presently governing Guyana’s rapidly developing petroleum sector. A two-week consultation on the document commenced yesterday.
It is still unclear whether the new Act would also apply to the Stabroek Block operated by ExxonMobil and its partners. The stabilization clause in the Stabroek Block Production Sharing Agreement (PSA) contains oppressive provisions, requiring Guyana to exempt ExxonMobil and its partners from new laws if their financial bottom lines are affected.
According to the proposed legislation, the Minister of Natural Resources, Vickram Bharrat can defer the royalty owed to Guyana or enter into an agreement with the Licensee for the payments to be made in parts. Bharrat will only grant these adjustments after consultation with the Minister with responsibility for Finance, Dr. Ashni Singh.
The draft Bill states at Section 49 (1), “The Minister may, on application made to him by a licensee and after consultation with the Minister assigned responsibility for finance, by order— (a) remit, in whole or in part, any royalty payable by the applicant, or (b) defer payment of any royalty, on such conditions (if any) as he may specify in the order.”
The proposed law also puts a penalty in place for any person who fails to pay the country royalty owed on or before the deadline. It notes that the Minister may, by notice served on the holder of the licence, prohibit the removal of, or any dealings in, or with, any petroleum from the development and production area concerned, or from any other development and production area subject to a licence held by that holder, or from both, until all outstanding royalty in arrears has been paid or until an arrangement has been made, and accepted by the Minister, for the payment of the royalty in arrears, and the holder shall comply with the notice.
The draft Bill goes on to make it clear that any person who contravenes these requirements shall be guilty of an offence and shall, on summary conviction, be liable to a fine of $20 million and imprisonment for three years.
The document is available on the Ministry of Natural Resources websites: www.nre.gov.gy and www.petroluem.gov.gy. A two-week consultation phase is ongoing allowing for the public to provide feedback. All comments should be sent via email to [email protected] during the period and by close of business on Monday, 3rd July 2023.
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