I have been representing Kinney Law Office as part of a U.S. State Department project to support the Guyanese Ministry of Natural Resources with development of their petroleum legal, regulatory and fiscal regime. Since April 2016, I have been providing legal and regulatory advisory support for the Ministry on aspects of petroleum policy and governance. The most recent mission to Guyana took place over the week of September 11-16th and included several meetings with Guyanese government representatives and U.S. State Department officials.
Guyana is a beautiful country on the northern coast of South America between Venezuela and Suriname. They are part of the Caribbean Community Market (CARICOM), a group of 15 Caribbean countries established in 1973 to promote economic development among the member states and to coordinate foreign policy. The economy of Guyana is heavily dependent on a few commodities, such as sugar, gold and timber. The total population of the country is estimated at approximately 740,000 and the capital city, Georgetown, is home to roughly 140,000 citizens.
Guyana became the focus of international petroleum exploration efforts in 2015, when ExxonMobil and its partners on the offshore Stabroek block drilled the Liza-1 well and made a petroleum discovery. Since 2015, four wells have been drilled on the Liza field, confirming a world-class petroleum discovery containing in excess of one billion barrels of oil equivalent (BOE). Additional exploration on the Stabroek block resulted in the discovery of the Payara and Snoek fields with the Payara field estimated at more than 500 million BOE. The Stabroek block is now estimated to hold between 2.25 and 2.75 billion BOE and further exploration efforts are expected to continue through 2018.
Against this very promising backdrop, I have been working with the Ministry of Natural Resources to improve the legal and regulatory framework in which these investments are taking place. Guyana’s current petroleum law was passed in 1986 and is based on a licensing framework. Despite the license-based framework, Guyana has used a production sharing contract as a basis for its relationship with oil and gas companies. For reasons that will be the subject of a forthcoming article on the topic, the license-based and contract-based legal regimes for petroleum governance do not work well together. My role over the past several months has been to analyze the current legal regime and develop ways to modify the current petroleum law to improve the ability of the Guyanese government to manage the incoming petroleum investment. The government has begun preparations of a set of revisions to the 1986 petroleum law that will be presented to the National Assembly for consideration later this fall.
The representatives of the Ministry of Natural Resources and other agencies of the Guyanese government have proven to be active and knowledgeable partners in this effort and I look forward to continuing to work closely with them on the petroleum law revisions. The contractors on the Stabroek block are expecting petroleum production to begin in early 2020, so there is little time to prepare. Proper management and governance of the petroleum development will ensure that Guyanese citizens see the maximum benefit from their resources and an improvement in their overall quality of life in the coming years.
