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Govt. retains provision in draft legislation to award oil blocks through one-on-one negotiations

Aug 06, 2023 News

Kaieteur News – The Government of Guyana has made revisions to the Petroleum Activities Bill 2023, a move that holds the power to redefine the nation’s oil future. Included in the update is the preservation of the provision allowing the Minister to conduct one-on-one negotiations for the issuance of oil blocks and related licenses.

According to the provision, the process to grant a license under the act can be executed through two primary mechanisms: a competitive tender or through direct negotiations. The latter is permitted when “special circumstances exist, which, in the national interest or national security, justify the use of direct negotiation to grant a license.”

While the provision may ostensibly provide flexibility to the government in its licensing process, it remains contentious among transparency advocates and certain sections of the public. The prior publication of the initial draft of the bill had already ignited concerns surrounding transparency and potential favoritism in the awarding of oil blocks, if the government takes this route.

Direct negotiations, as seen from previous transactions, can be fraught with opacity, which often fuels skepticism. The Canje and Kaieteur awards serve as noteworthy examples, where licenses initially granted to different entities through direct negotiation were eventually acquired by ExxonMobil, raising eyebrows. 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. ExxonMobil presently operates three oil blocks offshore Guyana, and has what can be described as a substantial monopoly over the Guyana basin.

 

Although the government has cited reasons such as the opportunity to foster regional energy cooperation and safeguarding national interests, for the potential government-to-government partnerships, this process requires a deeper layer of scrutiny. The government has said very little about how such partnerships would work. The provision explicitly allows for potential partnerships with nations such as Qatar and India, which government said have shown interest in Guyana’s oil.

While government-to-government partnerships can be strategic and beneficial, the key lies in the transparency of such negotiations. As Khemraj Ramjattan, the Leader of the Alliance For Change (AFC), pointed out, while there is no inherent objection to such collaborations, the details should be available to the public and the National Assembly. Transparency, in this context, is not just a buzzword but a necessary step to ensure the fair allocation of Guyana’s patrimony. Only time will reveal how these provisions are applied in practice and whether they serve the broader interests of the Guyanese people.

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