WPA renews call for national oil company

Dec 04, 2024 News

Kaieteur News- The Working People’s Alliance (WPA) is calling for the government to establish an upstream national oil company, citing that Guyana is now a rapidly developing petro-state and that globally over 75% of oil production is obtained from State-owned enterprises.

Referendum on oil contract crucial before any future negations with Exxon-WPA

Co-Leader of the Working People’s Alliance

During the party’s weekly press conference on Monday, Co-leader, Dr. David Hinds, said his party shares the widely published view expressed by its Executive Member, Professor Clive Thomas, that as a swiftly developing petro-state, Guyana must remain at the forefront of oil production.

He said that despite the present dominance of big oil companies here, over 75 per cent of global oil production is obtained from State Owned Enterprises (SOE) and 90 per cent of global reserves are held by SOEs.

Therefore, the case for a national oil company in Guyana depends solely on the location on the supply chain, whether it be upstream or downstream, Dr. Hinds said. He explained that since upstream and downstream oil and gas production is a reference to its location in the supply chain, the two can be categorised three ways: as upstream, downstream, or midstream. Some companies are termed “integrated” because they perform the functions of two or three of these streams.

“Upstream oil and gas production include exploring, developing, identifying, extracting and producing materials. Downstream oil and gas production include the post-production of crude oil and natural gas activities. Midstream operations link upstream and downstream and include transportation and storage services,” he said.

The party rejects a downstream State-Owned Enterprise (SOE) in the form of a refinery and is instead calling for an upstream SOE as was advised by the Natural Resources Governance Institute (NRGI), and by Professor Thomas.

“Creating an upstream SOE supports the building of local operational capacity in resource extraction, increases government revenue take, while improving the state’s ability to monitor what other companies are doing here. An SOE also plays a variety of roles, including operating in the commercial sphere, regulatory responsibilities, creating policy, and financial expenditures,” Dr. Hinds said.

Even though they are proposing the establishment of an oil company here, Dr. Hinds warned that “while some such SOEs are highly successful companies, others have trouble being competitive with international companies and demonstrating strong benefit to the populations they serve.”

Back in February 2022, at the annual oil and gas conference, Vice President Bharrat Jagdeo had told attendees that government was considering using the remaining oil blocks to form a national oil company. “At some point in time, the remaining blocks which we have, many people are asking, “when can we access these blocks or some concession offshore?” In the past, it was first come, first served basis,” Jagdeo said. “Since we have found oil, we have made it clear that we will either go to an auction some time in the third quarter of this year, with or without seismic done on our part. That decision still has to be made in government or alternately, use those blocks to form a national oil company.”

(WPA renews call for national oil company)

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Guyana, National, Oil Company, SOE, WPA

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