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‘The oil industry doesn’t need an independent regulator’
Dr. Bharat Jagdeo, Vice President
– Jagdeo said the government already has enough transparent oversight
Kaieteur News – Having promised a few months ago that his government would establish a petroleum commission in due course, Vice President Bharrat Jagdeo has reversed course, arguing that independent oversight of Guyana’s oil and gas industry is unnecessary.
Jagdeo told the weekly press conference on Wednesday that the PPP/SLPP-led government has done enough to transparently monitor the oil sector.“There is nothing magical about the Petroleum Commission,” Jagdeo told Kaieteur News in response to questions posed to him by the media on when the independent body would be established.
“There is no magic, we have given our agency the tools to regulate the industry.” Jagdeo showed frustration when asked about the agency, continuing: “For God’s sake, you know what it takes to do this, how much hard work it takes to do this,” before adding that the APNU+AFC opposition could have done it in their five years in power. “They did nothing, we did it in record time and now we have expanded the scope of the 1986 modern law,” he said.
The Vice President believes that the Petroleum Commission may not mean anything because the technicians nominated to the body will also be politicians. “They will pick Vincent Adams, who is a great technician even though he is a politician (just like) they put executive members in the Public Procurement Commission (PPC) and then say oh, it acts independently – it is a scam”, Jagdeo argued.
Different tunes
In January this year, the Vice President struck a very different tone. In fact, when the issue was raised at his first press conference of the year, Jagdeo assured that the government would fulfil its promise to set up a petroleum commission in due course.
Such regulatory bodies are established by governments to oversee and regulate the exploration, development and production of petroleum resources within their jurisdiction. They ensure compliance with laws and regulations, manage licenses and permits, and often play a role in promoting the sustainable and efficient use of petroleum resources.
During the press conference, Jagdeo assured that this has not been removed from the government’s agenda. “The Petroleum Commission, we said we are building the capacity of the (Department of Natural Resources),” he said. He further explained that in the interim, the government is focused on building a strengthened framework to manage accountability in the sector and that faster action is needed on some key issues.
He hinted that this was not the approach that technical bodies such as the Petroleum Commission would normally take. Jagdeo said it was the government’s insistence on swiftly establishing a regulatory framework for the sector that led to the passage of the new Natural Resources Fund Act, the enactment of a new Petroleum Activities Act, and the development of revised model production sharing agreements for deepwater and shallow water concessions. “All of this had to be politically driven to happen. Technical bodies would not have had the same sense of urgency,” he said, adding, “…anyone who assesses the sector from 2020 till date will see that there has been a dramatic change in the country’s tools for governing the sector…only biased people would not see that…” Naysayers aside, Jagdeo assured back in January that the government’s ultimate goal was to establish a Petroleum Commission to complement other advances in the sector.
The importance of supervision
Contrary to the Vice President’s statement, the Petroleum Commission can still perform various functions specified by the necessary legislation. For example, after Ghana discovered oil in 2007, it established the Petroleum Commission four years later with the mandate to “regulate, manage and coordinate all activities in the upstream petroleum industry…” Its important functions include analyzing petroleum economic information and submitting petroleum economic forecasts to the Minister; receiving and storing petroleum data, managing the National Petroleum Repository, and conducting reconnaissance surveys including data collection at the request of the Minister; evaluating and approving assessment plans; advising the Minister on matters related to petroleum activities such as oilfield development plans, oil transportation, processing and handling facility development plans, and oilfield and petroleum infrastructure decommissioning plans; monitoring petroleum activities and carrying out necessary inspection and audit related activities, including “any other functions related to the purposes of the Commission or conferred on it under any Act”.
In its analysis of the 2011 law, Offshore Magazine described the Ghana Petroleum Commission as having functions that go beyond any other regulator in Ghana. “It is a supranational regulator with a variety of powers that derive from its tripartite role. In addition to being a regulator in the technical sense, the Commission is also the steward of Ghana’s petroleum resources and, as a coordinator of relevant policies, it acts as an interface between government and industry.” Government agencies and departments are required to work with the Commission.
The Norwegian Petroleum Directorate is a government professional directorate and administrative body. It was established in 1972 and reports to the Ministry of Petroleum and Energy. The body has the same functions as the Petroleum Board, and its duties include acting as an advisor to the Ministry of Petroleum and Energy. It has national responsibility for “data on the Norwegian continental shelf. Our data, overviews and analyses form an important factual basis for carrying out activities. It says it is a driving force in realising resource potential, emphasising “long-term solutions, upside opportunities, economies of scale and joint action, and ensuring that sometimes critical resources are not lost.”
The agency says it “develops frameworks, lays down regulations and makes decisions in the areas it is mandated to do. In addition, we are responsible for conducting metrological audits and collecting fees from the oil industry.” It also contributes to “administrative capacity, resource mapping and petroleum data management.” It has about 70 teams with designated tasks, which are mandated to be responsible for products, processes and quality.
The 2019 World Bank $20 million loan document states that Guyana, with the support of donors, has independently completed a review of the existing oil and gas industry governance structure and developed draft laws and policies, including the Oil and Gas Policy (2016), Local Content Policy (2017 and 2018), and the Petroleum Commission Act (2017 and 2018). The document states that in December 2017, the Ministry of Finance applied for a $20 million loan from the World Bank “to support extensive governance reforms in its oil and gas industry to address economic and social impacts.”
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