‘Oil is coming’ – Trotman promises prudent management of resources

By Svetlana Marshall, October 31, 2015, Source

“Oil is coming,” and Guyana must be prepared, Minister of Governance Raphael Trotman said as he underscored the importance of having the “entire nation” involved in the development of the Hydrocarbon Sector.Trotman was delivering remarks at the Arthur Chung Convention Centre where a two-day seminar is being convened under the theme: “Building Capacity for Managing the Hydrocarbon Sector in Guyana”.

This forum marks the first of its type for the David Granger Administration in the development of a framework to manage the emerging oil and gas sector.

It attracted not only the UN Resident Coordinator and UNDP Resident Representative, Khadija Musa but other representatives from Australia, Kenya, Peru, Trinidad and the US, among others.

The Minister of Governance, in his address, said though preparation for the development of a “full-fledged” Hydrocarbon Sector will take several years, the entire nation needs to get on board with a single “plan of action”.

“An entire nation has to get on board together and with one plan of action. I ask aloud and rhetorically — will we allow our political differences to divide and diminish our potential once again?”

Guyana, he said stands before an opened door – a door that leads to great opportunity but while the country is eager to enter, it must do so with “care, caution and patience for what lies behind, though full of benefits, can also bring misery and grief”.

“The great opening before us is about the tangibles of oil, gas and prosperity and also about the intangibles such as sustainable development, conservation, protection and preservation. It is about new opportunities, a new Guyana, and a new people. This is what today’s seminar is about.”

MAJOR CHALLENGE
It was pointed out that managing a new extractive industry is a major challenge and as a result over the last 30 years many governments have been unable to adequately develop institutions and regulatory frameworks that allow for an effective functioning of the industry.

Well established institutions and frameworks, the Minister of Governance emphasised, allow for the utilisation of oil and gas revenues to finance policies that are economically conducive to both growth and poverty reduction, or to weather the storms of oil price swings.

“Those that choose to run through the open door unmindful of the force behind it have paid a heavy price. Time can be a friend or foe depending on how we utilise it. Guyana will respect time and not rush it.”

Alluding to the fact that the demand for energy is projected to grow by 37 per cent in 2035 while oil prices is expected to increase from today’s average of US$46 per barrel to an average of US$59 in 2016 and climbing, Trotman said it is clear that there is room and much benefit for Guyana to not only provide for its energy needs but also to join the energy provision market.

This development, however, raises a number of issues that must be treated responsibly, thereby embracing “a new world order that expects transparency in the management processes and equity in the sharing of natural resources as equally as it demands respect for the environment… and the movement towards the greening of the economy.”

As such, the Governance Minister said the establishment of the Hydrocarbon Sector must be implemented on the basis of the country-specific political and socio-economic context while capitalising on the experiences, lessons and policy recommendations from seasoned experts and practitioners.

“Guyana is being proactive in its approach to this emerging sector to ensure that all mechanisms necessary for the effective management and the best outcomes for its people are in place even before the first barrel of oil is brought to the surface, refined and sold.

“Today is one such step in that direction as the Government of Guyana with support from the evergreen and ever ready UNDP seeks to build the capacity of technicians, policymakers and other interest groups on the issues and challenges surrounding this emerging sector,” Trotman noted.

He added, that Guyana is not only willing to take advise and support embraced by the UNDP, but also the Commonwealth Secretariat with its support in the development of the Draft National Upstream Oil and Gas Policy; the Canadian Government’s offer of the depth of resources available in the University of Calgary to guide the development of a Sovereign Wealth Fund; and the United States Government’s support through the Energy Governance and Capacity Initiative (EGCI).

REGULATORY FRAMEWORK
Currently, the Government is seeking to establish regulatory framework and prudent fiscal management policies that would not only ensure transparency but provide clear standards and expectations for this sector.

“The Extractive Industries Transparency Initiative (EITI) is one international mechanism that seeks to ensure the transparency in the management of the extractive industries and is currently at the top of Governmental agenda to be pursued.

A focal point and group of stakeholders have already started to be engaged to take Guyana’s efforts forward in this regard. Another is the Open Government Partnership (OGP) that promotes similar ideals of transparency, and the sharing of information,” Trotman explained.

Meanwhile, in addressing Guyana’s action plan for the development of the Hydrocarbon Sector, he said recognising the need for a highly skilled workforce, the Government plans to revamp the public education system through informed analysis intended to address the supply of educated labour and its current and anticipated demand.

He stressed that “integrating the supply and demand of labour into a flexible, technical vocational education and training system to rapidly raise skills so as to make even the non-oil sectors competitive internationally” is critical.

Additionally, issues relating to the environment such as oil spill prevention and response, and social safeguards, and the alignment of the management of the sector with the country’s environmental priorities are also being addressed “adequately”.

“At the macro level Guyana’s priorities are being aligned with its commitment to international obligations and responsibilities for the post-2015 developmental agenda. The Sustainable Development Goals have set a bench mark which we wholeheartedly embrace,” he further added.

Meanwhile, in renewing the United Nations Development Programme’s (UNDP) commitment towards the establishment of Guyana’s Hydrocarbon Sector, the Resident Coordinator underscored the importance of establishing the requisite capacity and policies needed to effectively develop the sector, emphasising that nationwide consultation is also critical in the process.

Often times having resources such as oil and gas are seen as a “curse,” but Musa said these resources are seen as a curse when weak systems have been implemented.

“These resources only become a curse if there is no capacity within the country, wrong policies are implemented, and if consultation is not made throughout the community in order to develop the resources. Then it becomes a curse.” She pointed out that the Middle East and countries of the Gulf have reaped tremendous benefits from the development of their oil and gas sectors.

By Svetlana Marshall