PNCR sees no need for oil depletion policy

May 29, 2025 News

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…calls for feasibility study for each project, better management of oil revenues

Kaieteur News- The People’s National Congress Reform (PNC/R) has joined on the Depletion Policy debate, saying that while it sees no need for such a policy, the oil revenues need to be managed better to secure future generations.

In an invited comment by this publication Economist and Spokesperson on Oil and Gas for the party Elson Low said that a Depletion Policy cannot succeed, if the funds from oil which are placed in the Natural Resource Fund (NRF) continue to be spent in an irresponsible manner.

Stating his party’s position on the implementation of such a policy, he told the Kaieteur News, “we have long said that it’s important, that any government should conduct feasibility studies for each project to understand its implications for our economy. This will naturally mean that the depletion rate of our fields will have to be assessed.”

He explained that what the PNCR sees as more important is not the depletion rate, but the safeguarding of the resources. Therefore, a more disciplined and thoughtful approach must be taken with the NRF, rather than frequent amendments to the act to withdraw larger amounts, citing that the most recent amendment allows almost 100% of funds to be withdrawn.

Low’s argument is that, “Without a robust NRF, even a slower depletion rate would still jeopardize future generations, so safeguarding our sovereign wealth fund must be the priority. Similarly, even if we have a faster depletion rate, but also a strong NRF, intergenerational equity through savings would be preserved.”

He was also asked if he has seen the policy the Vice President (VP) referenced at his recent press conference. Low admitted that he has no seen the policy but he is aware of the VP’s approach of attempting to take full advantage of the higher oil prices presently.

“We’re saying that no such policy can succeed if the monies earned are spent irresponsibly because the NRF can be plundered. It is no longer a mechanism for saving under the PPP, but being treated like an ordinary bank account where you can withdraw everything except the last few dollars,” he stressed.

On the other hand, the second largest opposition party the Alliance for Change has a sterner approach to the situation, challenging the government to release the policy the VP is speaking about.

On May 26 this publication reported that Petroleum Engineer and spokesperson for the Alliance for Change (AFC), Dr. Vincent Adams, has challenged the Government of Guyana to make public its depletion policy, which Vice President Bharrat Jagdeo recently spoke of.

At his last press conference on Thursday, Jagdeo told Kaieteur News that Guyana’s current depletion policy was crafted to match the global market in terms of supply and demand. Calling his bluff, Dr Adams issued a challenge on Friday to release the policy, so that it could be perused by the opposition and citizens alike.

“Well, I have never seen a (depletion) policy from this administration. So, what Bharrat Jagdeo needs to do is publish his policy. Maybe I don’t know if you’ve seen it, but I have never seen a policy besides (him) talking stuff. What is that policy?” he questioned.

Dr. Adams said such a policy is born from long-term planning, based on the production profile over the years, which is available in the Field Development Plans (FDP). The government would have to look at their strategic plan in the projects they were looking to undertake, and compare to see if it matches what is in the FDPs. “Then you can devise a policy from that, if you want to not produce at the maximum level, then you can regulate how much oil you want to produce, etcetera. But… first of all, they have not released the FDPs, and I’m glad you asked that question,” he said.

During his press conference on Thursday, Jagdeo made it clear that long-term policies are not determined by day-to-day changes. Kaieteur News had asked the vice president whether he is considering putting a depletion policy in place to existing frameworks to manage and strengthen the oil sector, thereby ensuring maximum benefits for citizens.

“Should we have a depletion policy now…you don’t determine policies of a long-term nature on the basis of daily occurrences in an oil and gas market which is known for its volatility, and so when I saw that comment coming from Jordan [Winston Jordon- former Finance Minister] I wonder if he really understood policy,” Jagdeo said.

Jordan, in a May 5, 2025 article captioned, ‘Govt. should hedge, implement depletion policy in face of dropping oil prices’ published in the Stabroek News, said that with unpredictable oil prices and the International Monetary Fund’s (IMF) projections of lowering crude prices this year, the government’s ‘drill baby drill’ policy is flawed and a depletion strategy is needed.

In the article, Jordan opined that it is not too late to implement a depletion policy. “The more FPSOs [Floating Production and Storage and Offloading vessels] ExxonMobil brings on, it is with these additional costs,” Jordan told Stabroek News.

“And if you are now extracting more and more oil and at a less and less price, it will take longer to pay back Exxon’s [operational] costs. And in that, our dream of getting a better profit share will be like what Bob Marley said, ‘a fleeting illusion,’” Stabroek News quoted Jordan as saying.

However, Jagdeo, a former president and finance minister, said the type of policy that Jordan spoke about would have to be altered as oil prices fluctuate. “The depletion policy that we have now was carefully calibrated to take account of what’s happening globally, with the demand for and the supply of crude to the global market. Now, the overarching agreement to go to more sustainable sources of energy will cause a major reduction in demand for fossil fuel-related supplies. In the short term, this may not be so, but in the longer term, this will happen. We’ve already seen evidence of this taking place in the transport sector,” Jagdeo assured reporters.

He noted that the three largest sources of carbon emissions are burning fossil fuel for power generation, using fossil fuel for transportation and land degradation and deforestation. When combined, they account for nearly over 90% of all emissions. Citing that the transportation industry is headed towards electric vehicles, Jagdeo added that a depletion policy also has to take the environment into account.

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• depletion policy, Elson Low, NRF, Oil revenues, PNCR

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