The Caribbean and more specifically Guyana is the focal point for fossil fuel across the world since “gold” was first struck in 2015 by ExxonMobil. Exploration after exploration has come up lucrative causing continued interests and widening areas of exploration.
On the reverse, however, is renewable and alternative energy which is quickly rising to the fore for sustainable reasons across the world and funneling to the Caribbean. There is still a window of opportunity for the Caribbean to capitalize on their “New Found Wealth” before fossil fuel will be a lesser energy source for the greater good in protecting our climate and preventing the dangerous effects of Climate Change and Global Warming which ripped havoc across the Caribbean in 2017 by means of Hurricane Irma and Maria.
Below are some “facts and figures” for a quick grasp on where we stand to date.
Guyana Oil Facts
- Guyana, a South American Country bordering Venezuela
- Population under 1 million people
- 3rd poorest country in the region
- ExxonMobil has partnered with Hess Corp. and Statoil
- The major oil reservoirs found off Guyana to date. First discovery in 2015.
- Liza oil field
- Payara-1 reservoir
- Liza Deep
- Pacora-1 well (4 miles west of the Payara 1 well in the Stabroek Block)
- Suriname block purchased for exploration in 2017 – now jointly called the Guyana-Suriname Basin
- Guyana’s production should be 500,000 barrels per day
- Guyana has pledged transparency of its contract (NB: Trinidad and Tobago has kept their oil contract(s) secret for years)
Guyana Oil Structure Plans
- Guyana has no framework for regulating multinational oil companies like Exxon since they have never been in large-scale oil and gas extraction in the past
- Guyana’s foreign partners stand to earn 60 to 65 percent of profits, a far larger share than what more established nations are willing to offer investors.”
- Under Secretary Clinton, the State Department set up a program called the Energy Governance and Capacity Initiative. The program aims to both promote fossil development and prevent the “resource curse” by providing “independent oversight“ of the oil and gas industry in nascent oil states. The program is currently helping the Guyanese government write profit-sharing agreements, environmental regulations, and develop a strong rule of law to counterbalance corporate power – HuffPost article on Conflict: Tillerson Would Write the Rules For Exxon’s Major Oil Find in Guyana
- Guyana plans to be up and running with a Department of Energy to oversee the oil and gas sector in the country by August 2018
Guyana – the economic impact of their “New Found Wealth”
An article written by News Room on 3rd March 2018, called The Economy: The Oil Revenues relative to GDP, Economic Growth, Human Development, Income Distribution & Poverty states that Guyana is becoming more and more attractive to foreign investors, and of course, there is likely to be heightened excitement by the Private Sector and the Guyanese people.
News Room looks into how and if oil revenues translate to expansion in GDP, economic growth, and human development? Whether there will be a direct impact on human development especially?
Using 500,000 barrels a day a gauge, they noted that by 2020 much more discoveries are going to be revealed and therefore production capacity is very likely to be scaled up to as much as one million barrels per day in the first decade of commercial oil production.
In the first decade, assuming that oil price remains stable at US$50 per barrel, Guyana’s Gross Domestic Product (GDP) could reach GY$2.0 trillion or US$9.7 billion. They noted that as at December 2016, GDP was recorded at $711 billion or US$3.4 billion. Put differently, this means that in the first decade, Guyana’s nominal GDP could potentially expand by more than 200 percent.
They summarized by saying that with the potential huge growth in GDP (by almost over 100 % in the first decade, transforming the economy into a trillion or potentially a two-trillion-dollar economy), on account of large sums of oil revenues – does not necessarily mean that the quality of life on a broader spectrum – will be improved and/or experienced by a wide cross-section of the Guyanese people.
It does not guarantee real economic growth against the background of the human development paradigm – with respect to poverty reduction in particular.
Case in point, with the largest retrenchment in Guyanese (recent) economic history of some 10,000 sugar workers – having the far-reaching implication of further adversely affecting about 40,000 dependents – is a huge real blow in this regard. This outcome has in effect taken away approximately $10 billion in income distribution to these workers and the broader economy annually.
This means that the economic and social well-being of these people are going to decline rather rapidly and oil revenue would not necessarily create direct employment for them. There are a number of government programs nonetheless aimed at re-engaging these people in productive income generating activities such as training with new skills – namely carpentry and plumbing etc. But these measures, though designed with good intent, will not compensate for the economic loss incurred, neither would it give rise to stability and progressive growth in the income distribution of these thousands of retrenched people. See News Room for the full article.
Guyana – The oil critics
- Oil is no longer the major force it is today since the world is pursuing alternative energy sources
- In 10 years oil will not be sought after
- The world market will no longer reach the US$100 per barrel
The Rex Tillerson “Conflict”
- Venezuela claims ownership of the area where Exxon found the oil
- Rex and Venezuela have been enemies since Venezuela Exxon’s oil production there.
- The drilling in the “disputed waters” off Guyana, was therefore seen as Rex Tillerson “getting even” with Venezuela as was stated in the HuffPost article.
- Secretary of State, Rex Tillerson is fired by US President Donald Trump on Tuesday 13th March 2018 and CIA Director Mike Pompeo succeeds him.
Trinidad Oil Update
- Trinidad has long been the Caribbean’s largest oil and gas producer since 1990s. Mature fields have waned and no new exploration.
- However, August 2017 BP Trinidad and Tobago announced two major discoveries to rejuvenate the oil industry
Jamaica Oil Notes
Tullow announced plans to return to offshore locations off the southern coast of Jamaica to explore a field of “live oil” that was brought to their attention by local fisherman earlier this year. The firm will ramp up their 3D seismic surveys this year in hopes that the floating oil will lead them to vast oil fields the likes of their neighbours to the south and the nearby Gulf of Mexico.
Bahamas Oil Notes
The Bahamas has also publicized their plans to invite international companies to drill in deep waters off the coast, pointing not only to Guyana and the Gulf but also to neighboring Cuba’s oil reserves as an indication of what treasures may be laying under the surface of the sparkling Caribbean Sea noted by an article by Oil Price on The Caribbean Is Poised To Become The Next Major Oil Region
Exploration of oil reserves in the Caribbean will be ramped up and revolutionized by major technological advancements from Ursa Space Systems. The high-tech company plans expansion to take a global oil inventory of the Caribbean as one of its first major surveyed regions. Oil Price went on to say that Ursa’s satellite imagery can provide reliable and independent weekly inventories of oil stocks down to the tank level for easy calculations and better insight on oil supply and demand, especially in areas of the world where there has previously not been readily-available data.
Take a read of the inaugural issue of Construction Caribbean Magazine March 2018.