Guyana, according to Bloomberg Markets, is about to become the world’s newest petrostate and potentially the richest.
U.S investment bank, Morgan Stanley, reports that Guyana is projected to be among the world’s largest per capita oil producers and estimates of its reserves, which currently stand at over 6.6 billion barrels of oil and gas, is expected to be revised higher over the next 12 months with additional appraisal and exploration.
Dr. C.Y. Thomas, earlier this year, had presented a “bullish estimate of 13 – 15 billion barrels of high-quality oil as Guyana’s reserve potential” with the capacity at maximum output of 1.5 – 2.5 million barrels of high-quality crude oil per day.
Guyana already accounts for 15% of conventional oil discoveries made globally since 2015 with the discovery of 16 wells, in less than 5 years, by ExxonMobil and Tullow Oil in the Stabroek and Orinduik Blocks offshore Guyana and the potential for more crude strikes remain high as exploration and development are moving forward elsewhere in Exxon’s Stabroek block as well as the Orinduik and Kanuku Blocks, and the government has accelerated the drilling programmes for Tullow Oil, Repsol and CGX Energy.
Industry analysts have described Guyana as the world’s most “oil-rich country per capita” and assess that Guyana could become the second-largest oil producer in South America behind only Brazil, surpassing Venezuela, and OPEC’s 12th largest member after Angola.
Guyana’s oil sector already boasts an impressive roster of leading exploration companies in the world including companies from the USA, UK, Canada, Spain, France, Qatar and China, and others are seeking to join. Its economy, with a Gross Domestic Product (GDP) of US$3.63 billion, a growth rate of 4.1% in 2018 and 4.6% in 2019 and the lowest public debt in the Caribbean, is expected to further grow by 33.5% and 22.9% in 2020 and 2021 respectively with petroleum activities to account for about 40% of GDP by 2024.
Guyana is expected to earn an estimated US$300 million next year as Exxon ramps up to 120,000 bpd which could increase to more than US$5 billion by 2025, with production of more than 750,000 barrels of oil per day utilising five FPSOs in the Stabroek Block.
Multilateral agencies, like the IMF, have applauded the government’s “plans to establish a comprehensive legal framework for managing oil wealth”, and along with the World Bank and IDB are collaborating with the government in providing technical assistance and advisory services to build national capacity in the oil and gas sector.
The Natural Resource Fund (NRF) which was created earlier this year sets out the framework and rules for the management of petroleum revenues and includes rules for deposits, investments, withdrawals, reporting and auditing and a mechanism for public oversight.
In addition to the establishment and upgrading of the Department of Energy, several government agencies like the Guyana Revenue Authority (GRA), the Environmental Protection Agency (EPA), the Civil Defence Commission (CDC) and MARAD are also being strengthened as Guyana steps up preparations for the lifting and marketing of oil. The government is also working with our neighbours and other friendly countries, international agencies, firms and NGOs to develop human and institutional capacity and plans for dealing with developments in the oil sector, including the development of a National Oil Spill Contingency Plan.
The expectation and desire for a bright future based on unprecedented economic growth powered by the oil and gas sector is not shared by everyone, but for different reasons.
Some persons, like Jamil Changlee, argue that “we would be better off with the oil left in the ground” and Melinda Janki, an international conservation lawyer, opines that the “oil dream is really a nightmare” and predicts the collapse of the oil industry in the near future due to international climate change efforts.
Others confidently and regularly predict that Guyana would succumb to the dreaded “Dutch disease” and mismanage and corrupt its way to severe poverty like so many resource-rich countries have done previously.
In the view of the latter, oil wealth inevitably leads to economic distortions and dependence, burgeoning social and economic inequality, ecological and environmental disasters, political corruption and instability and conflict.
While these persons may be opposed to the oil sector on some principle, the opposition of others seems to be driven by opposition to the APNU+AFC government and political ambition which led to the No Confidence Vote (NCV) and the continued attacks on the President, Cabinet, the National Assembly, the Guyana Elections Commission and the courts.
These persons have sought to portray the country as a pariah state, administered by an illegal, unconstitutional and corrupt administration, and to encourage international actors to curtail relations with Guyana, to suspend cooperation, assistance and investments and to impose punitive sanctions.
The Leader of the Opposition has maintained that because of the passage of the NCV, the APNU+AFC government “is not in any capacity to work with the development of the oil sector” and therefore his party will not support any government initiatives and seek to replace the Natural Resources Fund Act.
This has been the rationale for the NCV and at the heart of PPP/C decision-making since the almost immediate public announcement of oil discoveries following their loss in the 2015 elections.
Recently, Minister of Foreign Affairs, Dr. Karen Cummings, felt compelled to warn against those forces which have become “envious and skeptical of the country’s progress and prospects” and are seeking to disrupt and prevent progress in Guyana. Centuries ago, William Shakespeare issued a similar warning: “It is the bright day that brings forth the adder, and that craves wary walking”.
President David Granger has declared that oil production will be the most transformative economic development in Guyana’s history and that APNU+AFC will lead the country into a “Decade of Development” which will lay the foundation for sustained progress and prosperity through the prudent management of petroleum resources and the repositioning of the economy for rapid and sustainable development which will be underpinned by the Green State Development Strategy.
According to the President, the Decade of Development will “witness the emergence of a world-class education system” and include at least 10 major sectors, including: economic expansion, diversification, restructuring, value-added manufacturing and food security; energy security and transition to renewable and clean energy; environmentally sustainable management of natural resources; infrastructural expansion, aviation and river transport and hinterland development; internationally competitive trade and investment; increased investment and improvement in national and public security; empowerment of regional and local communities; eradication of extreme poverty, homelessness and destitution; and institutional strengthening and constitutional reform for good governance.
Government is also looking at the construction of a US$500M onshore oilfield services hub on Crab Island on the Berbice River and the possible development of a deep-water harbour as well as the establishment of a 188-megawatt power plant powered by natural gas.
The choice for Guyana in 2020 could not be clearer or starker.
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