Guyana is preparing to pass new legislation, tighten existing regulations and establish a new oversight body to govern the still lucrative oil and gas sector, according to a well-placed source.
The proposed regulatory board for oil and gas is expected to include representatives from civil society, the opposition and government, rather than just the minister responsible for petroleum. “There is too much power in the hands of the minister,” according to the source.
Disclosure of the new regulatory mechanism for oil and gas comes as American oil giant, Exxon-Mobil, continues work on Liza 2 offshore Guyana to conclude the overall size of the reservoir that preliminary estimates are 700 million barrels.
With commercial oil production set to begin in less than five years, sources said Guyana is getting assistance from the United States’ Energy Governance Capacity Initiative, the Mexican Petroleum Institute and the United Nations Development Programme , the United Kingdom-based think-tank- Chatham House- and The Commonwealth to put in place a raft of new laws and regulations. They include amendments to the Petroleum Act, enactment of the Sovereign Wealth Fund legislation and accession to the Norway-based Extractive Industries Transparency Initiative (EITI).
Along with new laws and regulations, Guyana is said to be recruiting several foreign and local oil and gas experts who are based overseas, with special emphasis on the environment and safety.
Sources said a senior level government delegation is scheduled to pay a one-week visit to Uganda , which –like Guyana- is preparing to produce oil very shortly, very shortly. Officials are expected to include representatives from the Ministry of Finance and the Guyana Revenue Authority.
While Guyana’s contribution is expected to contribute to global oil output, experts say it will still be profitable for Exxon-Mobil.
Analysts conclude that while there is a heavy emphasis on renewable energy in mostly the Developed Nations, they at the same time predict increased demand for fossil fuel-powered vehicles especially in new oil-producing nations where the standard of living is expected to improve dramatically.
Exxon-Mobil has already conducted an analysis of the seafloor to determine how to configure its well and the Floating, Production, Storage and Offloading ships. That analysis has been conducted by Fugro Americas.