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Oil Minister can halt production over safety concerns – New PSA
(Kaieteur News) – The new Production Sharing Agreement (PSA) drafted by the government of Guyana (GoG) has implemented stringent safety regulations which now allow the minister responsible for petroleum to halt production over safety concerns.
Article 18.3 of the contract states, “If the Minister has, reasonable grounds, good reason to believe that any works or facilities erected by the Contractor or any Petroleum Operations conducted by the Contractor are endangering or may endanger persons or the property of any person, or are causing or may cause pollution, or are harming or may harm wildlife or the environment to a degree inconsistent with the Act, the Environmental Protection Act, any other applicable law, this Agreement and/or Best International Industry Standards and Practices, the Minister may require the Contractor to take remedial measures within such reasonable period as may be determined by the Government and to rectify any damage to the environment.”
Minister of Natural Resources, Vickram Bharrat
It continues, “If the Minister determines it to be necessary, he may also require the Contractor to discontinue Petroleum Operations in whole or in part until the Contractor has taken such remedial measures or has repaired any damage caused.”
Article 18 outlines a suite of requirements to govern the conduct of petroleum operations offshore. The contract makes it clear that the operator is mandated to take all steps necessary for the operations to be conducted in accordance with laws, licenses, the agreement and international best practices.
The PSA requires operators to protect the environment and potentially affected communities; ensure the safety, health and welfare of persons engaged in petroleum operations and maintain all facilities, equipment and property in good and safe conditions.
Other safety regulations mandate oil companies to control the flow and prevent the waste or escape of petroleum, water or any product used in or derived from the processing of petroleum and remedy any damage caused to the environment in a timely manner.
To date, two oil blocks have been awarded under the revised PSA. The first contract was signed with Total Energies, Qatar Energy and Petronas while the second was inked with Ghanaian offshore explorer Cybele Energy Limited- both for shallow water areas offshore Guyana.
Total Energies will operate Block S4 and Cybele will take charge of Block S7. Both blocks were auctioned during Guyana’s maiden bid round, launched by President Irfaan Ali in December 2022.
A total of 14 blocks were auctioned, however only eight of the areas attracted bids. In February this year, the Ministry of Natural Resources revealed that four PSAs with various companies were on the table to be signed this year from the auction. In addition to the agreement with the Total Energies-led consortium and Cybele Energy, contracts were also to be signed for the blocks S5 – International Group Investment Inc.; and S10 – International Group Investment Inc.
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