THE much-awaited March 2 elections are here. Regardless of which party comes out on top, there’s no doubt that the new government will take the reins at a profoundly important time in Guyana’s history. As many have noted, there will be a lengthy to-do list for our vital oil and gas industry, as Guyana’s status as a major emerging oil producer takes shape.
As many Guyanese know all too well, election season tends to raise the pitch of public debate, even as it lowers the bar for facts and reason. But the critical importance of the policies that will be implemented over the next few years makes it particularly important that Guyanese demand clarity and plans from officials, while keeping a critical eye on stories or claims that try to inflame public opinion.

Just five years ago, news of major offshore oil discoveries changed Guyana’s future forever. ExxonMobil’s announcement, coming after one of their partners had pulled out just a year before, shocked many who had written off the Stabroek Block completely. Today, the company estimates resources of more than 8 billion barrels of oil equivalent. Exploration and appraisal activities are still in the early stages in other blocks and in parts of the prolific Stabroek block.

The looming bonanza raised many initial challenges for a first-time oil producer, some of which have already been addressed. Our local content policy was recently finalised and published after years of work. Guyana has a functional sovereign wealth fund set up to take in oil revenues—the Natural Resources Fund (NRF). The agencies that will regulate the sector initially are in place and are rapidly expanding their capacity and knowledge base with help from groups such as the World Bank, the International Monetary Fund and the Commonwealth Secretariat.

Systems are in place to ensure officials from the Guyana Revenue Authority (GRA) and the Guyana National Bureau of Standards (GNBS) are on board oil-production ships to verify the integrity of the crude-lifting process and the government has already sold and lifted its first tanker of crude oil. But there is still much to be done on revenue management, business regulations, oil marketing and more. It will take even more work in the long term to create the institutional capabilities and knowledge to support all these programmes. Setting up reasonable and transparent rules and regulations, consistent enforcement mechanisms and strong anti-corruption measures will be the work of decades, but the foundation needs to be laid now.

The government will also need to find a marketing firm to sell its crude oil. There is already a contract in place to sell the first three lifts to Shell Western Supply and Trading Limited, but a formal arrangement with marketing professionals could help us get consistent buyers and good prices in the long term.

Chatham House expert Valerie Marcel recently laid out several other specific steps the next administration should take, including establishing a specific regulatory body for the oil and gas industry—like the proposed Petroleum Commission. She also noted the importance of building up institutional knowledge at the EPA and other agencies, but noted that overall, strong progress has already been made in many areas. Marcel added that the Ministry of Finance has made good progress laying out the rules for spending and saving oil revenues through mechanisms such as the NRF. Comprehensive plans for how wealth will be saved and spent are critical at this time, especially since revenues will be relatively low during the first few years as companies recoup their initial investments in exploration and development. This election will also help decide more fundamental questions such as what Guyana wants to do with its oil wealth and how oil money can fit into our development goals. Candidates and parties have suggested social programmes of all kinds ranging from direct cash transfers and free education to lower taxes, improved infrastructure and revitalisation programmes for the sugar estates. With revenues forecasted to be in the US billions annually in just a few short years, there could be sufficient money to fund an incredible range of programmes.

To ensure those investments are both prudent and smart, Guyana will have to be careful. Enacting international best-practice policies for things like how government contracts are awarded and how investment decisions are made, could help us get the most long-term value out of oil revenues. As Tahseen Sayed, World Bank Country Director for the Caribbean, said last April, “Well managed oil revenues can have a transformative and sustainable impact on a country’s development…Guyana today has an extraordinary opportunity to reduce poverty and bring long-term benefits to its people.”