Department of Energy to be established for the Petroluem Sector.

Another major oil find

-Dep’t of Energy to take responsibility for petroleum

Feb 28 2018


A map of the Stabroek Block showing confirmed discoveries as of the fourth quarter of 2017. Pacora where the most recent discovery is located is marked as one of six potential 2018-2019 opportunities.

Minister of Natural Resources Raphael Trotman yesterday announced another major oil find by ExxonMobil as well as the government’s decision to establish a Department of Energy which would take responsibility for the petroleum sector.

Following yesterday’s Cabinet meeting Trotman announced via the Department of Public Information (DPI) that the Pacora-1 well has in the last 48 hours become the site of Guyana’s seventh major oil discovery. The quantity and value of this discovery is expected to be announced today by ExxonMobil.

The Pacora-1 drill site which covers an area of one square kilometer is 107 miles from the coast of Guyana and 4 miles from the Payara well.

Since May 2015, ExxonMobil has had world-class discoveries at Liza, Payara, Snoek, Liza Deep, Turbot and Ranger-1, which are estimated to total more than 3.2 billion recoverable oil-equivalent barrels.

The Stena Carron drill has been responsible for 90% of these discoveries and Trotman took time to congratulate the crew for racking up these achievements efficiently without any injuries or any lost man hours.

The new oil discovery is likely to sharpen the ongoing debate that Exxon-Mobil has struck a bonanza here and left Guyana with a very poor financial deal.

Department of Energy

Trotman also announced that a Department of Energy which will be housed in the Ministry of the Presidency is to be established within the next six months

He explained that based on his proposal to President David Granger last year, a decision has been taken by Cabinet to establish the Department which in due course will have responsibility for the oil and gas sector.

“Last year I did propose to His Excellency, the President that we begin considering the establishment of the Department of Energy, a Department, which will be focused only on the development of the petroleum sector. Today we held and had a very lively discussion on the proposal, which I presented and it has been determined and decided that we will have the Department of Energy established and this will be coming within the next few months. Eventually the expectation is that the Ministry of Natural Resources will hand over responsibility of the function of petroleum to this new Department and we will see a more direct and focused mandate from this Department of Energy and we will of course, as a Cabinet be supporting the Department,” the Minister said.

In the interim Trotman will head a Task Force which will be responsible for submitting to Cabinet a proposal for the development of the mandate of the Department as well as how it will be structured and staffed.

The Task Force will also include the Ministers of Finance, State, Public Infrastructure and Business as well as the Ministers of Public Security, Public Telecommunications, Education and Social Protection.

According to a statement from DPI, Trotman’s proposal stated that “given the evolving macro-economic and national security considerations, and the transformative nature of the imminent production of petroleum…all policy matters, including, but not limited to, the negotiating and entering into contracts, and issuing of licences for exploration and production, [should] be transferred/re-assigned to the Ministry of the Presidency and placed within a Department of Energy and Development.”

The announcement of a Department of Energy has come as a surprise as the government had gone a long way towards the establishment of a Petroleum Commission which will not likely be compatible with the functions of the Department and may have duplications. Importantly, the Department would have responsibility for negotiating contracts and issuing licences for exploration and production.

Trotman and the government have come under sustained criticism over the quality of the 2016 Production Sharing Agreement with Exxon’s subsidiary, EEPGL and the secrecy surrounding the US$18m signing bonus. The government has been flayed for accepting what has been described as a paltry signing bonus and having to settle for a 2% royalty in a model where profit oil is shared 50-50. An International Monetary Fund team had stated that Exxon had gotten a very good deal from Guyana and local commentators have attacked the agreement on a large number of grounds.

It is believed that the establishment of the Department of Energy could provide the government with an opening to respond to the concerns of critics over the Exxon oil deal and to enhance transparency in these deals. It is yet unclear whether Trotman will have a role in the Department.

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