…Energy expert urges Guyana ahead of first oil

By Lisa Hamilton

SCHREINER PARKER, vice President of Rystad Energy (Latin America), has urged that, apart from Guyana’s Sovereign Wealth Fund (SWF), the country needs to set up separate education and infrastructure funds to steer clear of the infamous ‘Dutch disease’.

The two additional areas were identified as crucial to upwards development by the expert at a media briefing on Wednesday during the second annual Guyana International Petroleum Exhibition (GIPEX). Looking at Guyana’s trajectory, Parker said that Guyana will likely receive over $120 billion dollars just from the Stabroek Block alone and, by 2025, the country should have some $5 billion of this in its coffers.

However, he noted that there is much this country can learn from countries such as Norway. He expounded that before the discovery of oil, Norway was one of the poorest countries in Europe with its main industries being fishing and farming. However, after its discoveries, the country’s economy diversified significantly and Parker stated that the investment in education led the country to now possess the largest SWF in the world standing at over US1 trillion dollars.

The Norway SWF controls 1 per cent of all shares traded globally and 2 per cent of all shares traded within the United States (US). “Their mandate is to invest in everything outside of Norway and outside of the oil and gas phase so they have a…balance to their investment strategy that means if oil is low, they are not exposed to that from the Sovereign Wealth Fund perspective,” he said.

Works are progressing towards the full operationalisation of Guyana’s SWF with the recent holding of a workshop to educate members of its Public Accountability and Oversight Committee on their roles and expectations. The intention of the SWF – also called the Natural Resource Fund (NRF) – is to ensure that the revenue which comes from oil goes into that fund to be properly monitored. It also aims to ensure the stabilisation of the economy while ensuring that monetary resources are available through transparent methodologies in keeping with the Santiago Principles.

In highlighting the need for the two other funds, the Vice President said that as the world shifts from its dependence of fossil fuel to sustainable energy, Guyana must move quickly towards utilising its new-found resources to benefit the areas.

He noted that acquiring the funds is very much possible as he predicted that Guyana, by 2025, will have much in its financial reserves and must have a plan in place for allocation.
“The three main things are education, infrastructure and a Sovereign Wealth Fund… we have to think about the Guyana discovery in the wider context of the end of oil,” Parker said, adding: “It’s important to realise that time is of the essence. Infrastructure is one of the things that is immediately doable as well as the Education Fund.”

Back in October 2019, Rystad Energy ranked Guyana as the second country with the most oil discoveries for the year. The vice president urged local leaders to learn from the example of Norway, continue on its plan to diversify its economy through oil and ensure that the people of Guyana are the greatest beneficiaries in the end. Parker said: “Being able to bring that experience that was seen in Norway and being able to translate that to potential development here in Guyana is something we hope that we can do to help illuminate one way forward for the country of Guyana because there’s certainly a lot [of] responsibility that the government is going to have to make sure that this hundred billion dollars or more that Guyana is due to receive in its lifetime of production here, in terms of government take, is really used for the benefit of the people.”