Guyana’s oil, gas sector is among the better-managed industries in the world – GS Jagdeo

General Secretary of the People’s Progressive Party (PPP), Dr Bharrat Jagdeo has underlined that Guyana has one of the better-managed oil and gas industries in the world as the country continues to build a robust economy.

Speaking at his weekly press conference at Freedom House, the general secretary underlined that Guyana is often used as an example because of its management of the oil and gas sector and the rapid changes which have occurred in a short period.

The sector’s operations are rooted in transparency and accountability which is in keeping with the government’s efforts to guarantee robust management practices.

Dr Jagdeo emphasised that Guyana established the Sovereign Wealth Fund from the outset of oil production to save, something that many other oil producers—including Norway—have not always done.

“When you look at the provisions of the fund, that there is no direct charge on the Natural Resource Fund. Some countries have that direct charge on the Natural Resource Fund. We removed that. So, every cent that you spend of oil money has to go through a budgetary process – which means Parliament- you can’t spend oil money outside of the approval of Parliament. Not many countries have that. A lot of countries, you can go into the fund and spend the resources without seeking the approval of Parliament,” GS Jagdeo expounded.

According to the general secretary, money is transferred from the Natural Resource Fund (NRF) to the budget in Guyana openly and transparently.

He continued by saying, “We have the strongest disclosure agreement anywhere in the world in terms of receipt of oil money, with a ten years penalty jail term for the Minister of Finance for failing to disclose. And that is ongoing basis-every three months. We have strengthened the management of the fund by putting in a board instead of the Minister of Finance having sole oversight.”

Guyana has adopted a model that is suited to the needs in this sector, as a result of the government’s capacity to learn from the errors of other oil-producing countries.

He further elaborated, “[We have] some of the best practices in the world in our sovereign wealth fund apart from the saving. That is an example that many of countries are using now, how Guyana did that? The second area is a local content policy. Trinidad and Tobago had a local content policy, but not a law. It took them to get to that policy nearly 100 years after they’re producing oil and gas. We started it as soon as we got back into office, forcing now oil and gas companies not to hire Guyanese and to procure from Guyanese…”

Guyana also passed a new Petroleum Activities Act which is one of the most modern in the world, providing Guyana with the tools to manage the contemporary oil and gas sector.

This act has intensified guideline on the exploration, production, storage, and transportation of petroleum in the country. It also greenlights the construction of an oil refinery in Guyana.

“We are now moving to pass oil spills legislative…Very short countries have done in such a short period of time. We have done all of this in a relatively short period of time than countries that are better equipped, better resourced than us, even developed countries haven’t even gotten to as yet. So, it’s one of the better-managed industries in the world… Now, that doesn’t mean that we don’t have problems with the 2016 agreement, but I am telling you about the management tools and what we have done,” Dr Jagdeo emphasised.

Guyana is one of the few countries in the world which has a non-flaring policy. It has implemented a carbon tax for unscheduled flaring.

These initiatives and policies in the oil and gas sector have led to Guyana being utilised as a model nation.

“These are best practices that are used around the world. So, that’s why in spite of all the negatives, we get here in Guyana, globally and in many of these countries that are now trying to emerge as oil and gas producers, they are looking, to the Guyana example to learn a lot about how we have done this,” he noted.

Recognising that there is always need for improvement and expanding capabilities, Dr Jagdeo highlighted that Guyana currently is relying heavily on external consultants for guidance.

Additionally, the government is implementing actions to encourage local participation in the oil industry.

He continued by saying that local consultants will eventually replace the external consultants.

And so, he reminded that, “But what we have now, is light years away from what we had in 2020 practically nothing. No local content law. The 1986 law that we are managing with in the sector. No new PSA. All of those things. So, we never used to go to auction at that time. We didn’t have any seismic to prove our reserves we are going in this area too. [We] didn’t have oil spill legislation. There were no carbon taxes. It’s a light year away from what we had.”