Oil and Gas PSAs reflect gov’t’s commitment to environmental conservation
The draft models of the government’s Production Sharing Agreements (PSAs) for Petroleum Exploration, Development and Production are yet another example of the PPP/C Government’s commitment to ensuring the protection of the environment.
The Deep and Shallow Water PSAs help the country to manage and develop its resources more effectively by allowing the host country to retain ownership and control of its oil and gas reserves, while enabling international oil and gas companies to invest in and develop those resources.
In Article 3– Rights and Obligations of the Contractor of the 90+ page documents, the government outlines a number of obligations which oil and gas production companies must follow.
One requirement is that the contractor or company takes all necessary steps to ensure that its operations are executed with ‘as low as reasonably practicable impact on the environment’, specifying that activities must have the lowest possible Greenhouse Gas (GHG) operational emissions.
The specification is important, as Guyana has made significant efforts towards environmental conservation in recent years, particularly in the preservation of its forests and biodiversity.
These include the establishment of a network of protected areas, including the Kaieteur National Park, the Iwokrama Forest Reserve, and the Kanuku Mountains Protected Area.
Other incentives and initiatives by the government, such as the monetization of its low deforestation rate in the form of carbon credits, and the gradual shift towards renewable energy, have established Guyana as a global leader in sustainable development and environmental conservation.
The agreements also include, among other provisions, the need for contractors to repair any environmental damage that may occur as a result of their operations—activities including removal of equipment, structures and debris, pipelines, the establishment of compatible contours and drainage, replacement of topsoil, re-vegetation, slope stabilisation, filling of excavations, or any other appropriate actions; as well as the need for contractors to carry out petroleum operations in accordance with the best existing international standards and practices regarding environment protection.
These requirements include the employment of modern, efficient machinery, and the application of suitable technology to maximise the efficient recovery of Guyana’s oil and gas resources.
Companies operating offshore Guyana will also be contractually obligated to provide all information, environmental impact assessments and specific technical studies required for the purposes of obtaining applicable environmental licenses from the relevant authorities.
The agreements also emphasise the need for operators to provide descriptions of technical solutions aimed at preventing and minimising environmentally harmful discharges and emissions, as well as safety management systems, including estimates of the maximum quantity of fuels and oil that will be stored in drilling units or production facilities.
Guyana is one of only eight countries in the world to have achieved a net zero target. As the government continues to make investments in renewable energy, Guyana moves closer to the globally coveted goal of achieving 70 per cent renewable energy.