Mar 15, 2019 News
By Kiana Wilburg
Suriname and Guyana are CARICOM sisters who are adjusting to life in the spotlight on the global petroleum stage. As the governments of the respective countries hurry to strengthen systems for the looming wealth, the Natural Resource Governance Institute (NRGI) is urging that the policy leaders do the required homework and scrutinize oil companies’ activities where it matters most.
NRGI is an independent nonprofit organization dedicated to improving countries’ governance over their natural resources to promote sustainable and inclusive development. The headquarters of NRGI is based in New York.
NRGI said that Suriname and Guyana find themselves at different points in their life cycles as prospective oil producers. The Institute said that Guyana has already made large discoveries, while Suriname is at a more speculative stage of offshore exploration. Institutionally, NRGI said that Suriname has developed a small but capable administrative and commercial body—Staatsolie—as a result of its years of small-scale production, while Guyana is just beginning to build its administrative architecture in response to the discovery.
NRGI said that both countries have small populations and small economies. It said, “Suriname’s GDP is USD $3.6 billion, placing it 158th in the world. Guyana, which has a population just shy of 800,000, has a GDP of $3.4 billion, placing it 159th. This means that significant oil production could have a massive impact on these economies. If managed correctly, successful oil projects could mean a major boost to the development agenda of either country.”
NRGI noted however that the potential for negative distortions—including budget volatility and the disruption of other sectors—is high if risks are not managed effectively. In this regard, NRGI said that Guyana and Suriname would be wise to pay attention to some key areas.
“Managing relationships with private partners requires a nuanced approach. Many of the producing-country representatives emphasized the need to strike a healthy balance in relationships with oil company partners. It is necessary for the government to scrutinize company activities closely, and to ensure that they are following the rules and paying the state its due. But the path to success also involves government officials ‘doing their homework’ to ensure they are scrutinizing the right places and not unduly delaying or burdening their partners.”
NRGI also said that managing public expectations is key. It said that some governments have not been sufficiently proactive in educating populations about the distinction between oil exploration and having a commercially viable oil find. NRGI said, “This can lead to significant public distrust; when a well turns out to be dry, citizens—who had previously been led to believe that big revenues were imminent—often suspect foul play. Our officials believe in the importance of communicating with populations (about the timing, size and uncertainties of field development and associated revenues) in cases where a commercial discovery had been made.”
NRGI also spoke to the need for successful institutional reform which requires specific, achievable targets based on clearly defined policy goals and supporting legal and regulatory frameworks.
NRGI said, “Both Guyana and Suriname are considering significant reforms to the public structures that manage the oil and gas sector. In Guyana, the government has proposed legislation to establish a new petroleum commission to regulate the sector, and officials are considering whether to establish a national oil company to play a commercial role.”
In Suriname, the Institute said that authorities are considering potential reforms to Staatsolie—which now plays a mixed regulatory and commercial role—in the event of an offshore discovery.
It said that the consensus among Guyana and Suriname’s peers is that, faced with the daunting challenge of building the state’s capacity to oversee complex production, one critical step is to conduct a sober, rigorous needs assessment to facilitate strategic decision-making.
Guyanese you are being prostituted by your politicians!
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