New oil law has gaping hole

Sep 03, 2023 ExxonMobil, News, Oil & Gas

Kaieteur News – Guyana’s Petroleum Activities Act 2023, recently signed into law by President Irfaan Ali, includes commendable provisions for transparency in oil block awards. However, the government overlooked a key element: the obligation for public disclosure of oil block transfers from one company to another.

Section 9 of the Act requires that every application for a petroleum-related license is made public via The Official Gazette. This clause ensures that when the government receives bids in the ongoing offshore licensing round, it will disclose the names of all applicants to the public after the deadline for bid submissions passes. It would also apply to direct applications for oil blocks, through non-competitive processes.

Further, Section 13 elaborates on the procedures for awarding and renewing of licenses. A key feature is the requirement for the minister to communicate licensing decisions and their associated conditions to applicants. This two-way channel ensures that the government and company operate on mutual understanding and consensus.

Subsequently, Section 14 mandates that once this process concludes, the details of the granted or renewed license, including the license holder and the oil block coordinates, be published in the Gazette. This provision allows for the public to stay informed about who is operating their prized assets.

Another section, 88, speaks to the transfer of rights, for when a company opts to sell its stakes in a block to another company. It states, unequivocally, that a license holder cannot assign its rights under a license or petroleum agreement, in full or part, to another entity without the written approval of the minister. This ensures that the government stays in full control of all transfers pertaining to Guyana’s oil assets. However, there is no requirement for the Minister to notify the public, by way of the Gazette, when rights are transferred. While the government may be privy to every transfer of rights, the public remains in the dark unless the Minister or the company chooses to disclose it voluntarily.

This loophole bids concern among stakeholders, considering that CGX Energy recently transferred a portion of its stake in the Corentyne Block to Frontera Energy. While the companies and Vice President Dr. Bharrat Jagdeo all made public statements about the transfer, the matter was not gazetted. Similarly, Jagdeo recently revealed that the government has, in principle, agreed to allow Tullow Oil to dump its Orinduik block stake by selling its subsidiary to Eco (Atlantic) Oil & Gas. However, with there being no specific provision requiring the Minister to notify the public of such transfers, the only time the government notifies the public is likely to be through the Vice President’s utterances.

In the past decade, there have been multiple controversies surrounding oil block awards, most notably with respect to the Stabroek, Canje and Kaieteur blocks, and how, over the course of time, companies bought into the blocks, under circumstances that caused suspicion. Given this history and the monumental importance of petroleum operations for Guyana’s development, stakeholders see it as critical for this loophole to be addressed.