OVER the past week, representatives from 150 companies, foreign dignitaries, and heads of state from Ghana, Barbados and Suriname met in Guyana at the inaugural International Energy Conference and Exhibition – Guyana 2022. The conference comes just days after production commenced at the Liza Unity FPSO, pushing Guyana’s daily capacity to upwards of 340,000 barrels per day by the end of this year and putting it on the path to become a major global producer in less than a decade.
Investors spent the week meeting officials from state agencies, travelling to the inner reaches of the hinterland and learning about the many opportunities that abound in the oil and gas sector and beyond. This is one of the surest signs yet of increased confidence in doing business and soundness of the measured but accelerated push to put in place the framework, legislation and policies that will support Guyana’s oil and gas development in the years to come.
Guyana stands at the intersection of growing global demand for oil and gas, urgent need to address climate change and increasing global energy insecurity. The world will continue to need oil and gas even as we transition to more renewable energy sources, and Guyana is well placed to be the supplier of choice for old and new friends.
Vice President Bharrat Jagdeo highlighted this issue in his presentation while commenting on efforts to curtail new fossil fuel exploration. “Effectively, if you’re saying we can’t develop, you’re locking in the existing producers as in a monopoly. They have a monopoly for the next 30 years even if you don’t use fossil fuel, but we know we will still need it in 2050.”
But Guyana is uniquely positioned as a new producing nation to avoid past mistakes in oil-rich countries. From the outset, addressing concerns such as the resource curse and corruption and maintaining its identity as a low carbon state have been priorities.
ExxonMobil Chairman Darren Woods celebrated the success of the progress to date. “It’s truly remarkable how far we’ve come since we signed the production sharing contract for the Stabroek Block in 1999.”
President Irfaan Ali also reiterated the government’s commitment to investing and building for the long term. “We welcome Exxon. We welcome investments. Local growth and increased productivity must be built into the system to bring benefit to the people,” President Ali said during the opening ceremony.
Addressing the issue of climate change has been a central part of the national strategy. The recently updated Low Carbon Development Strategy recognises that Guyana can both be a supplier of oil and natural gas while building the foundations of a green economy. In her speech to the conference, Prime Minister Mia Mottley of Barbados echoed the sentiment that “net-zero does not mean zero”. Guyana can continue to develop its oil and gas while protecting large acreage of forests that trap and store carbon.
Responsibly producing oil, utilising local labour and building the country’s future through training and local content can be beneficial for all Guyanese and the region as a whole, if done right.
The fortunes of Guyana have shifted in other significant ways as well. Before oil was produced commercially, investors took on much greater risks to explore and required better terms to do so.
Dr. Daniel Yergin, Vice President at IHS Markit highlighted this shift well in his own remarks, saying, “[Guyana] was considered a frontier area with no commercial prospects; it was considered very high risk and with very little interest to the global industry. But a few industries were willing to take that risk, applying advances in technology and creative geo-political thinking, and transformed a province that seemed to have no prospects into one whose great prospects are being realised today.”
Now, Guyana is in a position to ensure that any new contracts and terms will reflect a matured oil and gas state and an improved bargaining position. Vice President Jagdeo echoed the point that new oil blocks will be put through in an auction process in line with international best practices. Guyana will also reserve the right to develop some of its acreage potentially through a national oil company.
Finally, Vice President Jagdeo emphasised the enormous scale of the investments Guyana has already succeeded in attracting. “Projects that have already been approved will probably spend about 30 billion dollars. That’s probably about 10 times, maybe more than the total deposits in our banking system. So just to give you an idea of the scale of resources, which would never be found here among locals. That’s why we need that partner.” The decision to pursue accelerated development of oil and gas is clearly reaping rewards, which will only grow in the years to come.
Projects like strengthening the seawalls and building a road network that can withstand flooding are now possible due to oil revenues and are urgently needed. More than US$600 million in oil revenues will be used in the budget this year from the natural resources fund and that is only the start of many billions of oil dollars that can be spent on critical infrastructure. All signs point to a record year for production and investment in Guyana and record earnings that will fund much-needed investments across society.