GUYANA’s oil production is projected to generate unprecedented revenues for the Guyana government and, by extension, the population as a whole. According to some estimates, total oil revenues could reach as high as US$30B over the next 10 years with production estimated to reach 1.2 million per day by 2030.
The country is on course for major transformation as oil revenues continue to flow and more wells become operational in the coming period ahead. Since the initial discovery of the Liza oil field in 2015 in the Stabroek block, the country has discovered close to 10 billion barrels of oil and there are indications of new discoveries.
All of this is good news for the people of Guyana who, for decades, were forced to survive on a narrow range of export commodities, especially in the agricultural sector with sugar and rice being the dominant exports. The mining sector, in particular gold, has, in recent years, been a significant contributor to the country’s Gross Domestic Product (GDP) but because of fluctuating prices on the world market, revenues were unstable and predictable.
Oil has now become a game changer. Like it or not, the oil and gas sector will make a huge difference in terms of our economic and social well-being, and from all indications it has already changed the growth dynamic of the country. The Ministry of Finance’s Mid-year Report has indicated that Guyana recorded real Gross Domestic Product (GDP) growth of 14.5 per cent while the non-oil GDP grew by 4.8 per cent. The revised full year forecast for real GDP growth is 19.5 per cent overall and 3.75 per cent for the non-oil economy.
According to President, Dr. Mohamed Irfaan Ali, this year promises to be the springboard from which Guyana will leap into recovery, rebuilding the economy, enhancing the people’s health and lifting up the vulnerable in society. “We must not remain a rich country of poor people”, the President said while re-affirming his commitment to ensuring that the wealth of the country be shared in a fair and equitable manner.
As the wheels of progress and prosperity continue to turn, expectations are high among the Guyanese people that better days are ahead. Such optimism are not misplaced, According to the IDB, oil production is expected to continue driving GDP growth with oil exports growing by an annual average of 48.5 per cent over the 2020-2023 period, thereby contributing to average annual GDP and government revenue growth rates of 17.1 and 6.7 per cent respectively.
The prospects look even brighter with the discovery of new oil wells with an estimated petroleum recoverable from eight to nine billion oil-equivalents. Additionally, ExxonMobil has updated its development plans of having five oil production projects by 2026 to six by 2027 which could possibly grow to a high often in future years.
Importantly, the PPP/C administration has made it abundantly clear that even as oil continue to be a major player on the economic landscape of Guyana, from a development perspective, the country will not put all of its proverbial ‘eggs’ in the oil basket. The non-oil sectors will not be de-emphasised as oil will be supplemental and by no means supplant the traditional sectors, especially agriculture.
The overall economic outlook of the country looks good despite the challenges of the COVID-19 pandemic, thanks to prudent management of the economy by the PPP/C administration.