Exxon gets production licence, MPs in fiery debate on petroleum bill

Government yesterday announced that it has issued a production licence to ExxonMobil for the Liza Field in the Stabroek Block saying that while quantifying oil in the well is not yet completed, it is estimated that there is as much as two billion barrels.

“I wish to report that government has taken the decision to issue a production licence,” Minister of Natural Resources, Raphael Trotman told the National Assembly last evening during his presentation on the Petroleum Commission of Guyana Bill, which was read for a second time yesterday.

“It is believed Mr Speaker that the estimable barrels of oil in the Stabroek Block maintained by Exxon may be equal to as much as two billion barrels of oil,” he added.

Trotman said that a decision was taken to send the bill to a select committee and thus a final position on it would not come until the committee’s work was completed.

An almost simultaneous announcement was made by his ministry in the form of a press release which said that the licence granting was an important milestone towards the first phase of oil production at the Liza field offshore Guyana. Production is expected to begin in 2020.

ExxonMobil Country Manager Rod Henson (left) and Minister of Natural Resources Raphael Trotman with the production licence. (Ministry of Natural Resources photo)

It said that following the approval of the Production Licence and environmental permit, it is expected that ExxonMobil and co-venturers Nexen and Hess will make a final investment decision on the Liza Phase 1 development.

In a separate process, it noted that the Guyana Environmental Protection Agency issued the Liza field environmental permit on June 1. “The environmental permit ensures that the environment is protected through the life cycle of the project”, the release said.

The Liza Phase 1 development plan includes completion of a floating production, storage and offloading vessel designed to produce up to 120,000 barrels of oil per day.

‘Comparable  Powers’

But while Trotman’s announcement of the licence was well received by the opposition People’s Progressive Party/Civic, that party’s parliamentarians criticized the bill presented yesterday with many questioning the powers granted to the Minister of Natural Resources.

“When we examine section 8 which deals with the Power of the Minister to give directions to the Commission, it is clear that the Commission will hardly be able to work without the direction and control of the Minister. According to Section 8, the Minister is not only allowed to provide policy guidance, but also give direction  to the Commission regarding, size of the establishment, the employment of staff and the terms and conditions of employment, the provision of equipment and use of funds, reorganization or such works of development as to involve a substantial outlay on capital account, training, education and research, the disposal of capital assets; the application of the proceeds of such disposals,” PPP/C MP Irfaan Ali stressed.

“Thus, the Minister is literally empowered to dictate inter alia, how many persons an independent Commission should employ, what should be the terms and conditions of employment for the staff of the Commission, how an independent Commission should use its funds etcetera.    Based on our review of similar legislation in other countries, we were unable to locate one that bestows comparable powers to the Minister. Indeed, based on our review we found that the only power the Minister is granted in other countries is the power to provide policy guidance,” he added.

Further, he pointed to sections 10:2 and 10:7 respectively lamenting that his party just could not accept the myriad powers the minister would have.

“Apart from the giving the Minister the powers to direct and control the Commission, section 10 of the Bill allows the Minister to perform the function of the Board where a Board is not appointed or not functioning. Therefore, based on this Bill the Minister can assume the role of the Board, in the same manner the Attorney General has taken over the role of the Deeds and Commercial Registry Board and despite being ordered by the Court to appoint one, the Minister can choose not to do so. We are also reminded in section 5 subsection (d) that the Board has a duty to “carry out the directions of the Minister as set out in section 8.”

“What kind of independence can you expect from an agency when the head is politically appointed and serving at the pleasure of the Minister? How objective, fair, and reasonable can you expect the Commission to be when it is headed by someone who is serving at the pleasure of the Minister and governed by a Board that is subject to the control and direction of the Minister?  What kind of control can a Board exercise over a person who is serving at the pleasure of the Minister? Given the powers conferred to the Minister by this Bill and the powerlessness of the Commission to work without the direction and control of the Minister this Bill should be called the ‘Minister Petroleum Bill of Guyana’. This Bill will not create an independent agency that would be able to carry out its mandate in a fair, transparent, non-discriminatory manner as similar agencies in oil producing countries. Instead, the Bill will create an agency that is a sidekick or subservient creature of the Minister,” he added.

‘Beneficial’

Piling on condemnation of the bill was a very impassioned PPP/C backbencher Vickram Bharrat. “While reading this Bill I was confused to the point that I was wondering whether we actually need a commission why not just allow the Minister to control the Sector judging from the amount of power and authority that this Bill will give to the subject Minister. Quite frankly the work of the Commission will be dictated by the Minister and the Commission will be baseless and ornamental. These powers that will be given to the minister over the petroleum commission as stated in the bill is one that is unacceptable and strange in comparison to other oil producing countries. In fact in most of those countries a lot of authority is vested in the President. The function of the minister should be to provide guidance and directions to the commission and act as a link between Parliament and the Commission,” he stated.

Drama filled the Parliament’s Chambers when it was announced by the Speaker, Dr Barton Scotland that Prime Minister Moses Nagamootoo had requested to also contribute to the debate and that this was acquiesced to.

Only seven speakers were listed to speak. On government’s side these were Trotman, David Patterson and Simona Broomes. For the Opposition it was Neil Kumar, Bharrat, Odinga Lumumba and Ali.

Shouts of no filled the chamber and when it was quieted Nagamootoo spoke. His views were that the bill was an initiative taken by his government to ensure transparency in the sector and that sending it to a special select committee was indicative of this.  He then went into the PPP/C’s failings while in power.

Opposition leader Bharrat Jagdeo followed suit and he too echoed most of what his members had already stated.  He warned of the Dutch disease syndrome should regulatory and other bodies not be  put in place in time for oil production here.

Like Nagamootoo, Jagdeo strayed from the bill being debated and went on to speak extensively on the sugar industry. When he regained focus he expressed his belief that government had no concretized plan for using oil revenues to develop the country and that the APNU+AFC was selling hopeless dreams. “All of these things are designed to talk up hope…it is a pipe dream,” he said to shouts of “spirit crusher”, “dream killer” among other taunts from the government side.

The House erupted when a seemingly irked final speaker in the Minister of Natural Resources, rose to blaze the opposition, especially Jagdeo.

“What we heard tonight Mr Speaker was an exhibition of grazing which ended in the gutter,” he said.

Referring to Jagdeo he added, “How can you come here and lecture us when you have left that behemoth at Skeldon? US$200M invested and can’t produce 1KW of power. How do you have the temerity and then you want to come here and lecture us as if you are the world’s greatest economist? How dare you lecture us? This honourable member is nothing but a doctor of doom…every sector you touched is down because of you… we will not be lectured by the leader of the opposition on good governance. I will take a lecture from Ms. Teixeira, from Mr Lumumba but not take a lecture from you. Not you, never ever. You can say whatever, you are a failure. That is why you are sitting over there”.

He said that his bill was drafted not in abstract but before the Commonwealth Secretariat. It provides a legal framework for regulating and monitoring an efficient, safe, effective and environmentally responsible exploration.

“We don’t in any way seek to take or arrogate any new or different powers…only to manage the sector in a way for the benefit of all the people,” Trotman said.

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