In a pivotal move aimed at comprehensively modernizing and regulating the oil and gas industry, the Guyana Government tabled the Petroleum Activities Bill 2023 in the National Assembly on Thursday morning. The proposed legislation seeks to repeal and replace the existing Petroleum (Exploration and Production) Act Cap. 65:04 and the Petroleum (Production) Act Cap 65:05.
The Bill has been drafted with the aim of intensifying regulation on the exploration, production, storage, and transportation of petroleum within Guyana’s jurisdiction, including the territorial sea, contiguous zone, continental shelf, continental margin, and exclusive economic zone. Additionally, the proposed legislation outlines provisions for matters related to carbon storage operations and decommissioning, reflecting the government’s focus on both economic and environmental issues.
The Bill’s preliminary section provides definitions of key terms significant within the petroleum value chain. This aims to ensure safe, economical, environmentally sound, and efficient activities.
In terms of administration and authority, the Bill underlines that ownership of petroleum will be vested exclusively in the State. The Minister, who is responsible for managing Guyana’s petroleum resources, will also oversee licensing of transportation and storage operations, along with the geological storage of carbon dioxide.
Furthermore, the Bill outlines the process for obtaining various licenses such as pipeline operations, geological storage for carbon dioxide, and geophysical survey permits. The Minister, guided by the Cabinet, can grant these licenses through competitive tender or direct negotiation, under special circumstances that serve national interest or national security.
A notable aspect of the proposed legislation is its detailed provisions on exploration, particularly around license renewals and the process for assessing petroleum discoveries. This framework will allow a licensee to submit detailed annual work programs for approval by the Minister, offering increased transparency and enhanced management. Additionally, the Bill gives the licensee an option to retain a discovery if it’s considered to have potential commercial interest within five years of its discovery.
The Bill also offers specific license terms for oil fields and natural gas fields, with renewable periods not exceeding ten years. It establishes clear procedures for the surrender of licenses, stipulating a notice period of not less than 12 months and the need to comply with certain conditions, such as the Local Content Act and best international industry standards and practices.
Further, the legislation seeks to establish a financial framework for the industry, stipulating rules for payments, such as rental, signature bonus, retention fee, and royalties. This section of the Bill also details the application of the Income Tax Act, the Value Added Tax Act, and Corporation Tax Act to licensees, but grants exemptions from the Property Tax Act and the Capital Gains Tax Act.
In essence, the Petroleum Activities Bill is expected to bring about substantial changes to the way the oil and gas sector operates in Guyana, contributing to increased transparency, accountability, and effectiveness in the industry.
