Stiff penalties for conflict of interest in broad-based Petroleum Commission; body to ensure Guyana gets correct amount of oil

Last Updated on Tuesday, 11 April 2017, 5:44 by Denis Chabrol

The proposed 10-member board of the Petroleum Commission will include representatives from civil society and the parliamentary opposition, and the Commissioner of Petroleum and board members can be fined and jailed for taking gifts and engaging in other forms of conflict of interest.

The Commission will also ensure that Guyana is not cheated of its oil and gas. Responsibilities will, according to the law, be to “ensure accurate calibration and certification of equipment used for fiscal measures for petroleum activities;   participate in the measurement of petroleum to allow for estimation and assessment of royalty and profit oil or gas due to the State and be responsible for the approval of the exercise;   ascertain the cost oil or gas due to operators;  and provide necessary information to the relevant authority for the collection of taxes and fees from petroleum operations…”

The tabling of the legislation follows the discovery of more than two billion barrels of high quality oil offshore Guyana and ahead of  plans by American oil giant, ExxonMobil, to begin commercial production in 2020.

The Board of Directors shall include the Chairperson, the Petroleum Commissioner and not more than eight other persons appointed by the minister. Provision is made for one each to represent civil society or academia and the parliamentary opposition.

The Bill says the Minister can be the chairperson if no chairperson is appointed.  The Chairperson shall be a person qualified and experienced in the petroleum industry disciplines of geosciences, engineering, economics, finance or law. The minister is also authorised to appoint the deputy chairperson, and the secretary to the board, who shall not be a  board member.

The other members of the Commission shall have proven experience in petroleum, geosciences or engineering;
health, safety and environment matters; law; business administration or management; finance or economics;
chemistry and process or refinery management

 

Key areas of responsibility by the Petroleum Commission will include advising the Minister in the negotiation of petroleum agreements and in the granting, amendment, renewing, extending, and revocation of licences;   promote, ensure and facilitating competition, access and utilisation of facilities by third parties to ensure optimal utilisation of existing and planned facilities and the   monitoring  conditions of operators and their trade practices to ensure that competition and fair practice is maintained.

The draft law, which will be tabled in the National Assembly later this week,  says the Petroleum Commissioner and board members “shall not accept gifts, loans, grants-in-aid or obtain any financial or other advantage directly or indirectly from any entity operating in the petroleum sector.”

Offences for which they can be fined GYD$5 million and jailed for three years on summary conviction include acquiring or obtaining the acquisition for his own benefit, directly or indirectly, by contract or other commercial arrangement , shares or other beneficial interests in any entity operating in or providing services to the petroleum sector or power to control the decision of the board or management of an operator.

They can also be disqualified if they directly hold shares or other beneficial interests in any entity operating in or providing services to the petroleum sector, are members of the board or an employee of an operator, have been convicted of an offence under this Act or an offence involving fraud or dishonesty by a competent court in Guyana or elsewhere or are un-discharged bankrupts or have made assignments or arrangements with creditors.

The law also bars the Petroleum Commissioner from being a public officer, parliamentarian, government minister or a member of a local government organ. If such a person is identified, he or she will have to resign his or her post before assuming the office of Commissioner.

The Bill further says the Commission shall be responsible for  the enforcement of the conditions of prospecting and production leases, concessions or exclusive permissions, or any licence, permit or production sharing or joint venture agreement entered into or deemed to be granted or entered into under the Petroleum (Exploration and Production) Act.  the collection and recovery of all rents, fees, royalties, penalties, levies, tolls and any other charges payable under the Petroleum (Exploration and Production) Act and any other revenues of the Commission.

The Petroleum Commission, which will take over responsibility of all petroleum-related documents and other data as well as some staff from the Guyana Geology and Mines Commission (GGMC),  will be tasked with regulating  the efficient, safe, effective and environmentally responsible exploration, development and production of petroleum in Guyana.  The draft law also seeks to ensure there is confidentiality of information obtained by board members of staff members of the Petroleum Commission in the course of their employment. “A duty not to disclose information extends for a period of 10 years after a person ceases to be a member of the Board or officer or a member of staff of the Commission.” 

The Commission will be responsible for promoting efficiency, conservation and safety on the part of operators in the conduct of petroleum activities;  ensuring that operators carry out the petroleum activities which they are licensed to perform;  promoting  competitiveness in petroleum activities; ensuring  transparency in relation to the activities of the petroleum sector and the Commission; and having regard due regard to sound and internationally accepted financial principles.

The Bill states that the Chairperson may or may not be the subject minister, according to the Petroleum Commission Bill. The other members of the commission, the draft law says, must have “proven experience” in petroleum, geosciences or engineering; health, safety and environment matters;  law;  business administration or management;   finance or economics;  chemistry and process or refinery management.

The Bill permits the minister to appoint ex-officio members of the Board to assist in the execution of the Board’s functions.   The Board shall be responsible and answerable to the Minister for the execution of its policy, functions and duties as well as any directions and assignments given to it by the Minister under the provisions of this Act.

When established, the Commission will be responsible for promoting government’s policies in the exploration, development and production of petroleum in Guyana;   reviewing and recommending to the Minister for approval, amendment or rejection the plans, proposals, reports, analyses, data and any other information submitted by an applicant or operator in support of an application for the granting or renewal of a petroleum prospecting licence or a petroleum production licence.

If required by the Minister, the law will empower the Commission to manage bid rounds for the grant of licences; monitor and ensure compliance with national policies, laws and agreements related to petroleum operations;  ensure that operators, contractors, sub-contractors and other persons involved in petroleum activities comply with all applicable laws;  ensure compliance with health, safety and environmental standards in petroleum operations in accordance with applicable laws and agreements and in cooperation with other government agencies.

The Petroleum Commission will be expected to ensure compliance with fiscal metering requirements in petroleum production activities in accordance with applicable laws and procedures;   monitor and regulate petroleum activities, including reserve estimation and measurement of the produced oil and gas, and carry out all other inspections and audits in keeping with the functions of the Commission and as required by law;  ensure well planned, well executed and cost-efficient petroleum operations for the achievement of optimal levels of petroleum extraction;  promote local content and local participation in petroleum activities;   ensure the establishment of a national petroleum databank including a central database of operators and other persons involved in petroleum activities, manage petroleum data and provide periodic updates and publication of the status of petroleum activities;  review and recommend to the Minister for approval, amendment or rejection of any proposed exploration activity contained in the annual work programme, appraisal programme and production forecasts submitted by an operator;   review and approve budgets submitted by the operators;  and review and advise the Minister on reports on discoveries submitted by an operator.