‘Be wary of the oil consultants’

Feb 18, 2022 News

– OGCI Chairman, Bob Dudley, tells Guyana some will bring good advice, others bring confusion

By KianaWilburg

Kaieteur News – Guyana’s oil bonanza brings with it an unprecedented opportunity to accelerate its growth and development. But during this process, it will most likely be besieged by a flurry of consultants who will be eager to share their words of wisdom. The Government of Guyana must therefore be wise in determining the best advisor for its cause. This was one of the key perspectives offered by Chair of the Oil and Gas Climate Initiative (OGCI), Bob Dudley.

Chairman of the Oil and Gas Climate Initiative (OGCI), Bob Dudley

The official made the foregoing comment during the International Energy Conference and Exhibition which started on Tuesday February 14, and comes to an end today at the Marriott Hotel. During his contributions, Dudley, who is a former Group Chief Executive of BP, noted that Guyana is squarely on the global stage with this event as he believes it is a major accomplishment.
Dudley, who has worked in the industry for four decades, said he believes Guyana is on a successful path and would agree with members of government, that the oil opportunity before the country is not about luck, nor will it be an easy task. It is going to be complex.
“There will be challenges, but if it is done in the spirit of win-win partnerships that the government has spoken about it will move rapidly. I have seen transformational growth projects similar to Guyana’s which have transformed countries. I have also seen transformations that went very slowly, that became uncompetitive for that investment capital which is scarce in the world. And those projects did not bring the prosperity that was hoped for,” expressed Dudley.
The industry expert said sometimes the risks that can hinder the potential progress a country can have from a project is not always associated with geological risks. He said sometimes the main risks are “above the ground.” Dudley said these can be in the form of the cost of construction, the investment environment changing, the misalignment of goals between the host nation and the operating investors, and a frequent change of terms or regulatory rules.
Dudley said even issues with procurement processes have unintended consequences. He was keen to note that mandating transparency in tendering for contracts in the oil sector is key, but stressed that oftentimes, going for the lowest bidder does not always guarantee quality service or a product. He said this kind of environment can demotivate good bidders from participating.
He is optimistic however that Guyana would not be affected in this regard. He noted that Guyana will be besieged by consultants to help in the process. Dudley warned however that some will have good suggestions while others will bring confusion. Dudley also cautioned that this can delay the success or progress to be had in the sector. As Guyana continues to navigate conversations about its future while building on its exciting production projects, Dudley said it would be wise for the nation to take note of the lessons and practices of other countries that have done spectacularly well in stewarding their resources, avoided many of the well known problems like the Dutch Disease and established strong sovereign wealth funds (SWF) for future generations. In this regard Dudley said, “Norway, I have always felt over the last 60 years, has been very successful. Today, it has a very high standard of living and the world’s largest SWF valued at an eye-popping US$1.4trillion. Qatar is another success story. Azerbaijan, which transformed its country in 20 years on the shores of the Caspian Sea, is also great to look at.”
The Chairman of the Oil and Gas Climate Initiative (OGCI), an international industry-led initiative established in 2014, also spoke to Guyana’s emissions reduction goals alongside its pursuit of oil development. He said, “You have been told or you will find that there are some people who don’t want you to develop your oil and natural gas resource and you will not be popular in certain groups with some as they passionately believe the world should stop production of all fossil fuels. I believe such people mean well.
“But many do not have any real understanding of the complexity and the vast size of the world’s energy systems, particularly outside of the wealthy regions of the world. They may lecture to you. But it is probably best to just listen politely, remain humble and as the President (Irfaan Ali) said, stick to your plan and strategy.”
At the end of the day, Dudley said people should bear in mind that the primary energy sources of the world in 1999 were 81 percent oil, gas, and coal. In 2019, those statistics, he said, remained the same while adding that this shows the reliance the world has on these resources. Importantly, Dudley said by 2050, there will be two billion more people in the world and they will need all forms of energy to survive. In conclusion, it is ideal to have more renewables as part of the energy mix later on. But one undeniable reality remains, said Dudley–The world needs Guyana’s light, low sulphur oil.