AFC blasts Rystad Energy for dismissing dangers Guyana faces in oil sector

Aug 06, 2022 News

Kaieteur News – The use of surface predictions instead of in-depth studies to determine Guyana’s growth in oil dollars is a trend the Alliance For Change (AFC) finds particularly worrying, especially as the nation continues to show signs of having the Dutch disease.

Shadow Oil and Gas Minister, David Patterson

The Dutch-disease, for those who may not be familiar with the term, refers to the exponential growth in sector, while the others are overlooked and therefore become uncompetitive.

David Patterson, the Opposition’s Shadow Oil and Gas Minister told Kaieteur News during a press conference yesterday that Rystad Energy, for example came to Guyana to present a report on the country’s rich resource and the revenues to come, but it completely overlooked the dangers the nation is exposed to as it ramps up oil production.

The former Minister of Public Infrastructure explained, “When these agencies come, all they do is tell you how great your oil is but they don’t do the deeper analysis which we need; this deep analysis we expect to focus on the effects of pumping so much money so quickly into a small and under developed economy like Guyana…so we have to be worried about these experts that have been rolling in.”

He reasoned that objective discussions are needed on the merits and demerits on the pace at which the country is extracting its resources, yet the ‘experts’ gloss over these subjects.

To this end, the Opposition Member of Parliament (MP) argued, “Yes we know that our oil is in high demand, yes we know that there’s a low breakeven point, yes we know that the oil will be in demand for the next 40-50 years even though there is a move for renewable energy… And yes we know that the oil companies are making billions of dollars on it… (but) hold on a second. There are challenges with the pace with which Guyana is going.”

He added, “We don’t have the capacity to do all the things that we would like to do at the same time…”

Patterson said oil companies have been purchasing stone for example in bulk, as they can afford to pay premium on the material while home-makers feel the pressure to source stone and other types of materials due to the high demand.

More worrying, however, is the fact that even though all the analysts seem to be excited to weigh in on Guyana’ wealth, the same specialists ignore the fact that the country may be heading down the path of the Dutch disease.

“Our fisherfolk will no longer be fishing, sugar is dead…they are not speaking about that and what naturally happens is every single industry will gravitate towards something in oil and gas because that’s where the money is,” he pointed out while adding that instead of the spotlight being given to these industries, government continues to be plastered on the front pages, celebrating other achievements.

The MP was keen to note that what Guyana currently needs is a research and compilation of various analyses which point to the pitfalls the country could look out for.

However, he said, “They are not doing that, they are just telling you the good, collecting the funding from whomever they are paid by (but) why are they here? Who invited them? Do they go to every single country that produces oil and present an annual report? They don’t. They pick and choose which countries they go to. If they were like say Transparency International and issues a worldwide report on oil production we could say yes, well we would accept it but they pick and choose where they go, so we do have a difficulty in selectivity of what they are doing.”

To support his belief of ‘surface-studies’ being done, Patterson pointed to the Food and Agriculture (FAO) study that was done on the declining fish catch, which reportedly concluded that oil and gas activities were not responsible, but rather climate change. After being pressed by an Environmentalist, he reminded that the body admitted it was a “rapid study” that was conducted, using data that was presently available.

Citing yet another example, the MP noted that full studies are yet to be done on the feasibility of the Gas-to-Energy project, yet Rystad eagerly opined that the venture would be beneficial.

Rystad Energy, an “independent” energy research and business intelligence company is headquartered in Olso, Norway. Since 2004, it has been reporting on oil and gas development in producing countries.

Rystad’s Senior Vice President (VP) and Head of Latin America, Schreiner Parker this week came to Guyana to unveil a study it conducted which, among other things, points to a projection that the country is poised to receive US$157B by 2040.

The report titled, Guyana Upstream Industry and Country Benchmarking Update, was unveiled to members of the business community at Duke Lodge on Friday, where Parker also spoke about the amount of associated gas Guyana has and the fact that it is moving in the right direction by bringing it to shore through a pipeline project.

During the question and answer segment however, when Parker was questioned about his qualifications or range of expertise that helped him arrive at his conclusions, he could not answer. He also admitted that his study was not peer-reviewed by any external expert.