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Govt.’s draft oil law proposes to leave door open for direct negotiations on future oil blocks

Jun 24, 2023 ExxonMobil, News, Oil & Gas

Kaieteur News – The recent publication of the Petroleum Activities Bill by the People’s Progressive Party (PPP/C) government has sparked questions about the potential for less transparency in the process of issuing oil blocks.

The Bill includes provisions that allow for both competitive tender and direct negotiations when granting licenses for oil exploration and development, and for carbon storage sites.

While competitive tendering ensures fairness and equal opportunity, the option of direct negotiation is often criticized for its potential to invite questionable transactions.

Under the proposed legislation, the Minister has the authority to grant licenses through direct negotiations if it is deemed the most efficient approach to allocate resources in a defined area, promote regional energy cooperation, or safeguard the national interest and security of Guyana.

This provision notably opens the door for government-to-government partnerships and agreements. While such partnerships have the potential to be beneficial, there is a pressing need for conditions to be in place to ensure transparency and accountability are preserved in the process. The government has mentioned that it has set aside blocks to strike possible collaborative deals with other governments, but very little has been said about the nature of such agreements. There is however notable interest on this front from Qatar and India.

The Alliance For Change (AFC), the opposition party in Guyana, had expressed conditional support for the government’s decision to engage in government-to-government agreements. Leader of the AFC, Khemraj Ramjattan, had stressed the importance of transparency and called for all details regarding these arrangements to be made public. Ramjattan stated that he does not object to government-to-government negotiations but wants to ensure that the public and the National Assembly have access to the specifics of such agreements.

It should be noted however that previous transactions in Guyana involving direct negotiations, have lacked transparency. Specifically, the Canje and Kaieteur awards were granted to different companies through direct negotiations but ultimately ended up in the hands of ExxonMobil. The shroud of uncertainty surrounding these awards continues to fuel scepticism about the potential for questionable transactions and the concentration of power in the hands of certain companies. Recall that these questionable awards were also made by the PPP/C under a previous term.

While the option of direct negotiation can facilitate government-to-government partnerships, some stakeholders contend that it would be more acceptable to transparency advocates if measures are put in place to prevent the repetition of past opaque transactions. By sharing the details of government-to-government arrangements and ensuring the National Assembly’s oversight, as suggested by Ramjattan, the government can address concerns and demonstrate its commitment to a fair and equitable allocation of the nation’s oil resources.

The draft Bill is now available for public consultation feedback until Monday, July 3, 2023, at the following websites: www.nre.gov.gy and www.petroleum.gov.gy

All comments should be sent via email to [email protected].

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