Kaieteur News

GEORGETOWN
EnergiesNet.com 09 20 2022

While Guyana has made some progress in routinely publishing information about the number of barrels of oil being produced as well as how much petro-dollars flow into its Natural Resource Fund (NRF), it is still faltering in some key areas.

According to the International Secretariat for the Extractive Industries Transparency Initiative (EITI), Guyana is yet to declare consistently information pertaining to the volumes of oil collected in accordance with the profit-sharing split, alongside the identity of the buyer for each oil cargo.  Furthermore, EITI said Guyana does not appear to have yet made progress on publishing descriptions of the process for selecting the buying companies, the technical and financial criteria used to make the selection, the list of selected buying companies, any material deviations from the applicable legal and regulatory framework governing the selection of buying companies, and the related sales agreements.

Expounding further, EITI said there has been a de facto cessation of awards of new licenses in the oil and gas sector since 2017, which was effective during the period under review (2018).  In spite of this, Guyana has not used its EITI reporting to disclose transfers of participating interests in oil and gas blocks, of which at least one took place in the Orinduik block in October 2018.  EITI said it remains unclear from publicly accessible documents whether any technical and financial criteria are assessed in either oil and gas license awards or transfers. It said, “Government officials explained that rigorous checks of licence applicants were performed (even if the criteria against which these checks were performed were not made public) but that these could be waived in the instance of well-known international oil companies (IOCs), as are the majority of the oil companies currently operating in Guyana.”

The international watchdog has since urged authorities to make the necessary efforts to come into full compliance with Requirement 4.2 of its Standards.

EITI REQUIREMENTS

EITI’s Requirement 4.2 speaks to sale of the state’s share of production or other revenues collected in kind.  It states, “Where the sale of the state’s share of production of oil, gas and/or mineral resources or other revenues collected in kind is material, the government, including state-owned enterprises, are required to disclose the volumes received and sold by the state (or third parties appointed by the state to sell on their behalf), the revenues received from the sale, and the revenues transferred to the state from the proceeds of oil, gas and minerals sold. Where applicable, this should include payments (in cash or in kind) related to swap agreements and resource-backed loans.”

The published data must be disaggregated by individual buying company and to levels commensurate with the reporting of other payments and revenue streams (4.7).  Multi-stakeholder groups, in consultation with buying companies, are expected to consider whether disclosures should be broken down by individual sale, type of product and price. The disclosures could include ownership of the product sold and the nature of the contract (e.g. spot or term).

Companies buying oil, gas and/or mineral resources from the state, including state-owned enterprises (or third parties appointed by the state to sell on their behalf), are also encouraged to disclose volumes received from the state or state-owned enterprise and payments made for the purchase of oil, gas and/or mineral resources. This could include payments (in cash or in kind) related to swap agreements and resource-backed loans. Kaieteur News understands that the published data could be disaggregated by individual seller, contract or sale. The disclosures could for each sale include information on the nature of the contract (e.g. spot or term) and load port. Also, where there are concerns related to data reliability and where practically feasible, the multi-stakeholder group should consider further efforts to address any gaps, inconsistencies and irregularities in the information disclosed.

REPORT

On 28 April 2022, Guyana was found to have achieved a fairly low overall score (52 points) in implementing the 2019 EITI Standard. The Validation Report outlines the full assessment of Guyana’s Validation by requirement. It is based on extensive stakeholder consultations and a review of three templates that reflect the components of EITI Validation, namely “Outcomes and impact”, “Stakeholder engagement” and “Transparency”. The Board decision, including corrective actions needed before Guyana’s next Validation, is published in the decisions register.

Validation is the EITI’s quality assurance mechanism to assess implementing countries on their ability to meet the provisions of the EITI Standard. The Validation of Guyana commenced on October 1, 2021. A public call for stakeholder views was issued on September 1, 2021. Stakeholder consultations were held virtually on October 11-29, 2021. The draft Validation report was finalised on December 6, 2021. Following comments from the Multi-Stakeholder Group (MSG) January 31, 2022, the Validation report was finalised for consideration by the EITI Board.

kaieteurnewsonline 09 19 2022