I was impressed by the obvious passion and commitment from many different Guyanese stakeholders at the recently concluded GIPEX Conference in Georgetown. There is a clear, strong desire to get the development of the oil industry right and for the country not to squander the opportunities presented by the truly amazing exploration success enjoyed by Exxon and their partners. There was a lot of spirited discussion on policy and governance of the oil industry, including local content, revenue transparency, contract transparency, sovereign wealth funds and regulatory independence. There is also a very evident concern about training and capacity development and environmental management, though perhaps less concern over safety management from Guyanese stakeholders than in other international oil conferences.
If I compare the level of the discussion and engagement since our first ‘post-oil find’ visit to Guyana back in 2015, it is clear that a lot of people in Guyana have put themselves on very intense self-education programmes to learn more about the industry and to be more engaged (our fi rst trade mission to Guyana actually predated the oil find by some six years). This is all very positive and bodes well for both the domestic private sector’s ability to capitalise on opportunities and for civil society’s ability to engage with the industry.
One reflection I had, however, is that amongst all of the efforts to engage with the oil industry, I am not sure if enough effort is going into thinking through and planning for the rapid economic growth that the massive oil finds are going to drive. These are fast-tracked projects with Exxon and their partners are clearly pushing as much exploration and development as possible, while rig day rates and development costs are still at low levels. Seven years from now, Guyana could be producing as much as 500,000 barrels of oil per day. This is going to have many implications for the Guyanese economy, outside of oil.
As the presentation by Lisa Waters, Vice President of ExxonMobil Development, made clear, economic growth and energy consumption are very strongly collated for developing economies. It is only a handful of the most developed economies who have managed to divorce economic growth from growth in energy demand, and this has only happened in the recent past. Economic growth in Guyana is going to mean that demand for electricity is going to grow very fast. I know that this is being considered by some technocrats in Guyana, but from the discussions at the conference, I did not get the impression that this fact was high on the agenda of the private sector or other stakeholders.
There has been a lot of comparison being made between production sharing contracts in Ghana and Guyana. I think that stakeholders in Guyana may also be wise to learn from the problems that Ghana experienced with electricity delivery when its economy boomed.
The other item that worries me is transport. Every time I go to Georgetown, traffic seems to get a bit worse. If the economy booms and car ownership significantly increases, traffic could become a nightmare and a real drain on productivity (and quality of life). If the government succumbs to the destructive temptation to subsidise transport fuels, this will only exacerbate the problem. I hope that Guyana takes the opportunity to invest heavily in public transport and understand that it should be subsidising mobility and not car ownership. We got this wrong in Trinidad and Tobago and we are living with the consequences.
Perhaps these conversations are going on and I just have not heard them because of my focus on the oil industry. I hope so, because I think that
they are important.