IS OIL IN DEM WATERS?
The settlement of the maritime boundary dispute between Guyana and Suriname has opened the way for the resumption of oil exploration in what is now lawfully Guyana’s Exclusive Economic Zone (EEZ).
But is Guyana prepared for this major step, considering the risks involved as has been so vividly exposed during the recent oil spill in the Gulf of Mexico? During the spill, millions of gallons spewed into the Gulf of Mexico.
Days after BP succeeded in sealing the spill during which time millions of gallons of oil were released into the Gulf of Mexico, some of that oil appeared in the mainland. Interestingly, days after BP managed to seal the leak, scientists began to explain that a large percentage of the oil had been eaten up through natural biological processes in the Gulf. While the worst is over, the spill showed how risky investments in the petroleum industry is.
Also are we prepared to ensure that Guyana gets the best possible deal from any oil found in our territorial waters or are the oil companies going to extract the bulk of the profits and perpetuate the cycle of exploitation by foreign companies of Guyana’s natural resources?
Right now we are in the pre-exploration stages. If oil is found, all the necessary technical studies will have to be done before drilling takes place. Any bonanza is therefore not likely to the people of Guyana until the next twenty years.
Oil is therefore not going to make an impact on our economy until the distant future? And while it is another generation that will reap, if any, the benefits of any oil discovery in Guyana, it is the present generation of Guyanese, including those who are to leave public office who must ensure that the interests of Guyana are safeguarded through the agreements that are signed.
This is why it is imperative at this stage that the agreements that Guyana has signed with CGX be laid before the National Assembly so that there can be no allegations about secret deals. It will be a great disincentive to investors interested in developing off-shoot industries if they are not sure of what are the rights of the companies which will be granted exploratory and drilling rights for oil.
Guyana’s case before the Arbitral Tribunal of the Law of the Sea Convention was admirably argued. But these processes are never cheap and therefore there are bound to be questions as to who paid for the costs of presenting Guyana’s case. The government ought to assure the nation that Guyana’s legal bills and the cost of presenting its case were not paid for by the taxpayers of this country.
We certainly have the money now and can afford such fees considering that local resources are likely to fund two billion dollar projects: the road to Amaila Falls which is expected to cost some US$15M and the Hope Outfall Channel which is expected to end up cost some US$20M.
If Guyana can find the resources to do these projects, it would certainly be able to afford to pay for the cost of presenting Guyana’s case in front of the arbitral tribunal of the Law of the Sea Convention.
Arguably, any company that is engaged in exploring for oil undertakes a great risk in terms of its own outlays. Millions of dollars have to be spent to explore for oil. If it is not found, the company involved loses big.
As such, companies exploring for oil usually ensure that they enter into agreements such that if they do hit oil they will enjoy drilling rights.
No one should therefore have any problems with any drilling company, which may have already sealed rights to Guyana’s oil reserves should it hit oil during drilling. This is how the industry has historically operated.
But for Guyanese, it is important that the terms of any such deal be made public so that at least the next generation knows what to expect should oil be found.
Before the Berbice River Bridge was constructed, there were reports in the media about a company establishing an oil refinery near to where the bridge was located. The people of Guyana also need to know whether there is any agreement granting rights to anyone because should oil be discovered, there is going to be a parade of companies flocking Guyana seeking to cash in our bonanza.
Oil is not going to solve our problems, but it will make it much easier for us to ensure long term economic improvements. As such, we need to ensure that the relevant systems, agreements, standards and regulations are in place so as to avoid the mistakes that others learnt through costly experience.