Planning for the anticipated oil windfall

Jan 21, 2017 Letters

Dear Editor,
It has been reported in the news media that a partnership of oil companies, Exxon Mobil, Hess and CNOOC have discovered oil and gas estimated by experts at over four billion barrels off Guyana’s northern coast in a field called LIZA. Another field PAYARA was also found and exploration is on-going to better assess its resource potential.
The Minister of Natural Resources (MoNR) has stated that oil/gas is anticipated to flow to on-shore terminal facilities by Yr. 2020 but this is unlikely to happen before about Yr. 2023, for several reasons. The world is presently awash with oil being marketed at depressed global prices per barrel. Therefore, the financial rewards are presently slim for the oil companies to quickly recoup their investment and hence they will be cautious to make large capital outlays to start production and build expensive export facilities such as pipelines, storage tanks, berthing terminals and other infrastructures at this juncture of their find, unless the MoNR has in his possession an approved timetable for development of the resource from the oil companies.
In the absence of such assurance, the oil consortium will no doubt continue their exploration and assessment while preparing detail plans, mobilizing materiel, equipment and personnel to get the infrastructures in place for the first shipment of oil to global markets. This will initially be a slow process but could be speeded up when the consortium decides that the price for oil is favourable for them to do so.
In the interval, Minister Trotman should start getting the Petroleum Directorate established and functioning with policies and legislation in place to govern the new sector. In doing so he should make every effort to build consensus with the opposition to prevent contentious situations developing as was the case with Amaila Falls Hydropower Development. This will also prevent any new administration from raising problematic issues for the oil companies should the APNU+AFC Govt. fail to get the mandate of Guyanese at the next general elections.
Oil has brought wealth, corruption, impoverishment and armed conflict in many countries such as Nigeria, Angola and Brazil. It has led oligarchies and their lackeys to loot their way to untold riches with very little of the new found wealth benefitting the people. Therefore the APNU+AFC Govt. should lay the framework and implement policies to prevent improper diversion and squandering of the riches expected from the oil/gas resources of Guyana and develop ways and means for its people to benefit from the intended oil windfall.
Charles Sohan

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