Tag: Oil and Gas

The absence of or rather failure to appoint inspectors and a Chief Inspector was highlighted in last week’s column. The seriousness of that failure lies in the fact that the Chief Inspector is the person with direct responsibility for the administration of the sector, to manage the oil companies, so to speak. The last Administration failed to do so for around twenty years and cannot use as an excuse that oil was not a big deal then. After all, thousands of hectares of potentially mineral rich resources offshore were given out to oil companies which by law should be supervised by the Chief Inspector and inspectors appointed by the Minister. The exploration phase is admittedly light on expenditure but it does give operators exclusive right to carry out prospecting activities in the blocks for which they receive a prospecting licence.

It was therefore careless in the extreme that even after the establishment of a natural resources ministry, the PPP/C made no such appointment. Of course, that gave the Minister extensive influence over the oil operators, which was probably the objective. Then came the APNU+AFC Coalition which has also failed to act a full two years after a significant oil discovery with the likelihood of more to come! Continue reading “Every man, woman and child in Guyana must become oil-minded (Part 9)”

Introduction

Today we turn our attention to how the country, and more particularly the PPP/C Government and the APNU+AFC Coalition Government have managed the country’s potential and discovered petroleum resource. In 1939, the legislature passed the Petroleum (Production) Act vesting in the Her Majesty the property in any and all petroleum and natural gas within Guyana and made provision for their exploration and exploitation.

Despite later and substantial amendments to the petroleum laws, the ownership of the state in all petroleum has been the essence and foundation of our petroleum legislation now contained in the in the Petroleum (Production) Act and the Petroleum (Exploration and Production) Act Cap. 65:04.

What this means is that any discussion on petroleum matters ought at this point to be discussed against the backdrop of the existing two Acts and Regulations 5 of 1986. Continue reading “Every man, woman and child in Guyana must become oil-minded (Part 8)”

In today’s column we conclude our review of the science and technology which goes into the prospecting, exploration, development and production of petroleum products. Readers will recall that we looked last week at the formation of the building blocks of petroleum and discussed at some length how they are formed. The challenge as we noted, was how to locate the rocks where hydrocarbons are stored in sufficient quantity to be commercially viable. It is all about science and technology.

As Michael Forrest writes in Deepwater Petroleum and Exploration and Production – a Non-Technical Guide published by Penwell of the USA, the technology boiled down to seismic data, especially 3-D data provide a quantum leap in allowing the prospecting company to determine the probability of success. This process is a four stage continuum of acquisition, processing, display and interpretation of data. Continue reading “Every man, woman and child in Guyana must become oil-minded (Part 7)”

You will have noted that the title of the column this week has been changed from Oil and Gas – the new Economic Horizon. It comes from the banner headline of the Daily Chronicle of November 18, 1930 and is a reminder to us all that we need to start thinking oil and gas not only because of the benefits which can accrue to the country but also that there are in fact few countries which have made proper and responsible use of their oil endowment. We only have to think of the Dutch Disease, Resource Curse or Oil Curse, or think of Venezuela, the country with the highest reserves of crude oil in the world based on latest data, to recognise that oil is not a panacea. Indeed, oil countries are more than fairly represented in the list of most corrupt countries. So as we bear the topic in mind, we need to be ever conscious that oil then is neither a good indicator of a country’s economic wellbeing, its human capital or a measure of its governance.

Where does oil come from, how is it discovered, explored and extracted? Is there some pool of the gushy, mushy stuff just waiting to be taken out of the ground, whether under the earth, the sea or the oceans across continents? I have reached out to oil industry experts who have all tried to make the origin of oil and gas into a concept which I can understand and can therefore pass on. If I fail on both counts, it is entirely my fault.

After all, it is not easy for an accountant to dispel the embedded, popular notion that oil and gas reside in large cavern-like pools underground. Continue reading “Every man, woman and child in Guyana must become oil-minded (Part 6)”

Local Content

So far, these columns have taken a narrative approach and it was intended that once all the information was placed on the table, some analysis, both critical and policy directed, could be undertaken. However, it is not always possible to adhere strictly to this formula as current issues arise. For example, it was announced last week that ExxonMobil had been granted a production licence which moves closer to the day when Guyana will finally become an oil and gas producing country.

While the announcement was made in the National Assembly, there was no report of any details concerning the licence, including its duration and any other conditions imposed on the company. The Petroleum (Exploration and Production) Act does not require the gazetting of any notice of the grant, nor does the Act require its tabling in the National Assembly. Maybe caught up in the excitement of the announcement, no MP may have considered it helpful to ask the Minister to provide some details. After all, a licence is granted under section 35 of the Act and may be subject to conditions as determined by the Minister. Unfortunately therefore, it is not possible to determine any particulars under which the licence has been granted. And just in case, there is no confidentiality obligation under the law regarding disclosure of the terms of any licence or contracts. Continue reading “Oil and gas – The New Economic Horizon (Part 5)”