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Oil contracts must mean more than a foreign investor investing millions – T&T’s Attorney General
The guardians of Guyana’s oil and gas sector are being cautioned to focus on the benefits of the people and not the multimillion-dollar investments through the diversification of the entire economy.
Trinidad and Tobago’s Attorney General, Faris Al Rawi
This was the assertion of Trinidad and Tobago’s Attorney General, Faris Al Rawi, when he visited Guyana to attend the 46th Plenary Meeting of the Caribbean Financial Action Task Force (CFATF).
He told Kaieteur News that based on his country’s experience in the oil and gas sector, Guyana must ensure that the utilization of the oil and wealth reserves are matching developments in the rest of the economy.
“Do I use it on my shores for myself and own products as opposed to selling it or not? You have to look at harmonizing your oil and gas regime so that your gas pricing and your energy pricing contracts mean something for the people, more than just a foreign investor coming and investing three billion U.S. dollars. The question is: what is in it for Guyana? What does Guyana get out of it?”
Al Rawi said fossil fuels have to be carefully managed because of climate issues and commodity pricing. According to the AG, Trinidad is currently very focused on using the oil and gas sector to propel other parts of the economy.
“You don’t want to be in a case where your economy crashes because the sale of oil and gas has plummeted due to commodity price issues,” he warned.
The AG cautioned that Guyana avoid over-analyzing the sector, because there is a tendency to want to “get the perfect combination right”. Al Rawi emphasised that fossil fuel as a main economic contributor has a significant negative against oil and gas utilization and the emerging alternative energy, along with the Paris Convention, which requires reduction of the carbon footprint globally.
“There is still adequate coal underground in the whole world that is not being mined because of the carbon footprint aspects, and because of the economies of exploitation. So getting your exploitation right at the right time is critical,” Al Rawi said.
Critical to the sector is the decision to have a careful, harmonized approach, and Al Rawi said Guyana must weigh the benefits for the upstream companies and the downstream industries. He said there is significant amount of potential for the utilization of Guyana’s reserves onshore.
“There is nothing that says that you must sell your oil and gas. What you want to do is to exploit your earnings well enough. There is utilization into electricity, utilization into manufacturing; all onshore, where you take your own reserves and develop the downstream industry for yourself. This means you don’t have to suffer the vagaries of a market where you’re dependent on who you can sell to and at what commodity price, be it, oil or gas,” Al Rawi stated.
He said Guyana could learn from Norway, in particular, where the heritage and stabilisation fund has managed to anchor very strong reserves.
“They are in the trillions of dollars U.S. in their heritage and stabilization fund and that’s largely because they took a lot of their profits and utilized the profits, because they focused on their diversification of the economy at the same time,” Al Rawi noted.
Guyana is in the process of establishing a Sovereign Wealth Fund (SWF) to hold monies earned from the sector.
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