Guyana has a very narrow window to further adopt best practices to ensure long-lasting value from the development of the country’s hydrocarbons resources.
So reads an IDB technical note which highlights that the latest oil producing nation faces a volatile global energy operating environment, not only impacted by price swings but also new challenges, such as the COVID-19 pandemic, and renewable energies.
“The size of the expected oil-related windfall, in combination with existing development challenges, is expected to strain the current legal and regulatory framework,” according to the note’s authors.
Among the areas that need attention are those related to information disclosure and accountability.
Although the authors highlight the creation of the Natural Resource Fund to mitigate the risk of Dutch disease, they argue that a broader fiscal framework would strengthen the fund amid greater debt-financed spending.
Information from the central bank (Bank of Guyana) shows that the fund’s capital at end-June totaled 19.8bn Guyanese dollars (US$94.7mn) and that there have been no withdrawals to date.
Another recommendation is the need for a strong independent regulator, such as the creation of a petroleum commission, which President Mohamed Irfaan Ali announced in his inauguration speech.
“The creation of a regulatory agency with a skilled, professional staff, who understand both the technical and commercial drivers of the sector is a key structural feature of countries that have successfully increased investment, production and revenues from their natural resources over time,” highlights the report.
Building national capacity to advance with local content policy plans is also pitched by the researchers in the technical brief, available here.
On Thursday, Irfaan appointed a local content panel to conduct a consultation and draft recommendations. The new authorities have pointed to alleged shortfalls in the current policy, which was released in early 2019.
And Georgetown-based Centre for Local Business Development has posted opportunities for local companies from GYSBI, TechnipFMC and Schlumberger.
In a related note, on Friday the Ministry of Natural Resources published the previously announced request for proposals – available here – to provide marketing services for Guyana’s oil entitlement from the Liza Destiny FPSO vessel (pictured).
Also Read A Not-To-Do List for Guyana’s New Administration When It Comes to Oil and Guyana petroleum taxation system ‘efficient’