Guyana’s parliament on Thursday passed long-awaited oil legislation that grants the natural resources minister extensive power over its multi-billion-dollar oil industry.
The new rules will be applied to future projects in the South American country, including from an oil blocks auction scheduled for the fourth quarter. A group led by Exxon Mobil Corp XOM.N currently produces all oil in Guyana.
The Petroleum Activities Bill approved by the National Assembly replaces the Petroleum Act of 1986, the country's main oil legislation. It passed with no amendments after a seven-hour debate and awaits the president’s approval. Natural Resources Minister Vickram Bharrat would oversee oil operations under the bill.
That includes granting exploration, production and environmental licenses - whether obtained through competitive tenders or through direct negotiations.
The minister also will be responsible to enforcing the law and applying fines. He will operate under review by the nation's cabinet. It does not mention review by regulatory agencies or exclusive Parliament attributions. The Petroleum Activities Bill will govern conditions not mentioned by former legislation, such as the transportation and storage of hydrocarbons from offshore to onshore, Bharrat said.
It also allows Guyana to obtain access to oil feedstocks for any future refineries, he said. “If our share of profit oil is inadequate, then we can purchase it from operators. This ensures that a refinery does not become a stranded asset,” the minister said.
Guyana has emerged as the fastest-growing oil producing state since first discovery in 2015. Its offshore fields are estimated to hold 25 billion barrels of oil, with plans already underway to pump about 1.2 million barrels per day by 2027 - more than many OPEC nations.
Guyanese authorities recently signed an agreement with Dominican Republic officials to pursue a 50,000 barrels per day (bpd) refinery in Guyana. Guyana separately is reviewing bids for another, 30,000 bpd refinery.
Opposition officials expressed concern about excessive powers to the minister, and called for a Petroleum Commission. The government, which holds a majority in parliament, dismissed claims as unnecessary. Guyana’s Attorney General Anil Nandlall argued that the minister would not have absolute power as he would be under Cabinet’s guidance and the administration is accountable to the parliament.
The law's drafters consulted with several countries for advice such as the United States and Trinidad and Tobago, the attorney general said. The law is one of the key items Guyanese officials have promised to have in place before a Sept. 12 deadline for the submission of bids in its maiden oil auction.
(Reuters - Reporting by Kiana Wilburg, Writing by Sabrina Valle; Editing by Alistair Bell)