Category: The Road to First Oil

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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)”

“We use or produce oil but the contracts that make it all possible have been secret. Until now …..” This quotation which is taken from the blurb of the book Oil Contracts – How to read and understand them while a bit optimistic, does have a ring of truth about it. Freely available on the internet, this publication under a Creative Commons licence notes a change in the transparency dynamics of oil contracts under which oil companies and governments have historically used non-existent confidentiality clauses to conceal information from their citizens and the public at large.

It bears noting, and perhaps periodic repetition, that the model (Petroleum) Production Sharing Agreement under which oil companies are granted licences for the exploration and development of petroleum imposes confidentiality obligations only in respect of petroleum data, information and reports obtained or prepared by the oil companies. Any statement to the contrary is not only misleading: it is false and untruthful. Transparency and the overriding public interest in such contracts have caused a number of such contracts to be made available both at the national and international levels. For example, the University of Dundee, Scotland; Revenue Watch Institute, an NGO; and the World Bank and others (resourcecontracts.org) are facilitating the process by collecting and disseminating them in searchable databases on the internet. It must be more than ironic that Guyanese have learnt more about their own oil resources and contracts from the US Securities and Exchange Commission than from the Government of Guyana. Neither law, logic nor the public interest requires or favours the continuing withholding of the oil contracts signed by the Government of Guyana ostensibly acting on behalf of the people of the country.

In today’s column we offer some additional information and a map of the exploration and production contracts currently in force. Continue reading “Oil and gas – The New Economic Horizon (Part 4)”

“There are not many places left on earth where you can put together an acreage portfolio like this …. Good contract terms, good support from the Government – there are not many happy hunting grounds left.” This quotation comes from Africa Oil CEO Keith Hill in referring to the situation of Kenya, not too long ago considered a frontier country with no prior history of petroleum resources and therefore having to offer generous terms to attract high-risk exploration.

This week we continue our review of the legislative framework for oil and gas exploration and development in Guyana with a focus on subsidiary legislation. However, before doing so, special attention is paid to the confidentiality provisions of the Act and those under petroleum agreements, and the taxation provisions contained in section 51 of the 1986 Petroleum (Exploration and Production) Act (Chapter 65:04). Continue reading “Oil and gas – The New Economic Horizon (Part 3)”

"Who has oil has Empire." This statement is attributed to Henry Bérenger, Advisor of French Prime Minister Georges Clemenceau quoted in the editorial in the Daily Argosy of Tuesday 16 July, 1929 on the occasion of a meeting to be held that day at the Town Hall to “discuss the steps, if any, to be taken in the matter of the development of the potential Oil Industry in British Guiana in the placing of an embargo by the British Government on the nature of Capital which should be employed in its exploitation.”

The second in this series of columns on Oil and gas turns its attention to the legislative and regulatory framework for the exploration and production of oil and gas in Guyana. While this column starts with a focus on the legislation put in place in the 1920’s and 30’s, it would not be correct to assume that no legislation existed before that time. Again turning to the Daily Argosy, this time of November 19, 1929, we note references to the imposition of an “Oil Embargo” spurred by the suspicion of the presence of oil deposits in the colony. According to the editorial, the regulations under which exploration licences were issued were modified from time to time “to safeguard the colony and the Empire’s needs.” Those regulations required that “no licences were to be issued or transferred to other than British subjects or to companies in which there was not fifty-one per cent bona fide British control and ownership.”

The effect of a policy of securing the interest of the “colony and the Empire” was to keep out the Americans. It is to be recalled that it was in Pennsylvania, USA in 1859 that the first well for petroleum was mined, allowing the Americans a position of dominance in oil production in succeeding decades. It is therefore somewhat ironic that in post-colonial Guyana, it is an American company ExxonMobil that is at the forefront of oil development, while a British company, Tullow is playing catchup, and the country’s needs and interests still very much dependent on international interests and capital. Continue reading “Oil and gas – The New Economic Horizon (Part 2)”

As Guyana moves to First Oil – that long dreamt event with the possibility of transforming our country – it is hoped that this column will contribute to a better understanding of the vast opportunities and the unobtrusive pitfalls that await us. As historian Nigel Westmaas reminds us, more than 86 years ago, the headline in the British Guiana’s Daily Chronicle exhorted us: “Every Man, Woman and Child in British Guiana Must Become Oil-Minded!”.

Yet, the announcement by oil giant ExxonMobil on May 20, 2015 that it had struck oil in deep waters in Guyana’s territory took Guyanese by total surprise. We have simply had too many cases of hopes raised, only to be dashed, of traces of oil found in various places in Guyana. The unsuccessful search under the first petroleum licence issued in our colony in 1938 did not deter further attempts, particularly in the fifties, to find the black gold. In fact, Standard Oil, the progenitor of ExxonMobil was issued with a licence in 1958 to carry out offshore and coastal exploration.

While this column, courtesy of Stabroek News, is not about looking back, the paucity of legislation to regulate the exploration or production of oil in Guyana stands out in the country’s quest for oil. In fact, the first piece of petroleum legislation passed in 1930 was about the importation and regulation of the distribution of refined petroleum products. More than fifty years later, Deputy Prime Minister, Planning and Development, Haslyn Parris presented to the National Assembly the Petroleum (Exploration and Production) Bill 1986.
Continue reading “Oil and gas – The New Economic Horizon (Part 1)”