Guyana soon will test a principle too frequently swamped by a harsh reality of human nature.
The principle: Oil and gas development should broadly benefit citizens of countries in which the work occurs.
The harsh reality: Money invites misbehavior at scale proportionate to sums not carefully and transparently controlled.
Guyana’s prospects for resource riches grew this month when ExxonMobil reported its Guyanese unit and partners had made what not only is their sixth discovery in deep water but also their first in carbonate pay.
The earlier Liza, Payara, Snoek, Liza Deep, and Turbot strikes all are in sandstone. The Ranger-1 discovery thus opens another play concept and pushes gross recoverable resources estimated for the Stabroek Block to more than 3.2 billion boe.
Production from the first phase of Liza development is to start through a floating production, storage, and offloading vessel in 2020, by May of which Guyana will hold national elections.
“The influx of oil revenues will make the 2020 vote a winner-takes-all situation, increasing the risk of social unrest and reducing government stability,” warns Sam Benstead, Latin American analyst at global risk consultancy Verisk Maplecroft.
Guyana, he points out, has a population of only 773,000, underdeveloped governmental institutions, and low per-capita economic output.
Now a sudden influx of money looms.
Benstead says President David Granger is developing a regulatory agency and a specialized institute to train workers for the industry, both likely to be in place by 2020, and working on other fronts to prepare his inexperienced government for new wealth.
At the same time, he must deal with a territorial dispute with Venezuela and a left-wing opposition eager to reclaim power in a political climate charged with tribal divisions.
The challenge is to create governmental structures to keep oil proceeds flowing to proper uses and to publicly account for every dollar.
Benstead thinks the government is “taking the correct steps” but observes: “The 2020 election will be an important test of these processes.”
(From the subscription area of www.ogj.com, posted Jan. 19, 2018; author’s e-mail: [email protected])