OREANDA-NEWS. February 15, 2017. Guyana is setting up an agency to oversee its embryonic oil industry in anticipation of ExxonMobil?s plan to start offshore production in 2020.

The petroleum directorate, a new division of the existing natural resources ministry that will be established next month, "will help to reduce the likelihood of the country suffering from a paradox of plenty and Dutch disease that have afflicted some oil and gas producers in recent years," a ministry official told Argus today.

The reference is to the potential for a strengthening of the local currency from a sudden overwhelming inflow of revenue from one sector, usually a natural resource. The currency appreciation harms other parts of the economy, drives up imports and generates unemployment.

"We have seen this happen in some countries, and we are wary of falling into a similar trap," the official said. The directorate will help Guyana to make the best use of the future oil revenue and protect the environment, the official said.

"The directorate will be similar to that of some countries that have managed this situation successfully," the official said, declining to confirm reports that Georgetown is eyeing the Norwegian model.

The directorate "is very important because we need to start preparing and using the opportunity to get as many things as possible in place for when we start producing," a government statement said.

ExxonMobil struck oil on the 6.6mn-acre (26,800km2) Stabroek block in 2015, and later confirmed a discovery of more than 1bn bl of oil equivalent (boe).

The US major operates the block with a 45pc stake. US independent Hess holds 30pc, and the remaining 25pc belongs to Chinese state-owned CNOOC unit Nexen.

ExxonMobil plans to start production at Stabroek in 2020, using a 100,000 b/d floating production, storage and offloading unit (FPSO).

Guyana is examining the feasibility of building a refinery for the new production, or shipping it to nearby Trinidad and Tobago for processing at state-run oil company Petrotrin's 168,000 b/d Pointe-a-Pierre refinery.

Guyana strengthened its economic ties with Trinidad this month by upgrading its consulate in Port of Spain to a high commission. And Trinidad?s Energy Chamber, which is grappling with declining oil and gas production at home, plans to lead a trade mission to Guyana in April.

The private sector in Guyana set up an oil and gas association late last year. The group is sponsoring an inaugural oil and gas conference in Georgetown on 26-28 March.