After the oil is gone

Dec 22, 2023 Features / Columnists, Peeping Tom

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Kaieteur News – Fifty-three years ago, Norman Girvan wrote an article entitled “Multinational Corporations and Underdevelopment”. In that article he unearthed the practice of oil companies shifting production to different parts of the world.

For example, he observed that the United States shifted production to Mexico in the early 20^th century. Then between the 1920s and 1940s, they shifted from Mexico to Venezuela.  In the 1950s and 1960s, production had shifted to the Middle East. Girvan argued that this shift was analogous to what took place in plantation economies. In otherwords, it follows a pattern of economic colonization

Despite what happened in the 1970’s following the massive increases in the price of oil, the same pattern of shifting production continues. Venezuela is now sidelined for geo-political reasons and therefore new frontiers have to be found.

Guyana and parts of Africa are now once again in the limelight following oil discoveries. At present, oil multinationals are encircling Africa in search of oil. Africa still accounts for close to 8% of global oil production.  On the other hand Namibia, South Africa, Sierra Leone and Liberia are seen as promising for future oil discoveries.

In July of this year the five major oil- producing countries in Africa were Libya, Nigeria, Angola, Egypt and Algeria. In keeping with the traditional policy of displacing supplies, attention is now being focused on Namibia. That country’s Orange Basin.

Guyana’s on the other hand has an estimated 11 billion barrels. This however is still far less than the 300 billion barrels of reserves held by Venezuela.

We are told that production in Guyana will soon reach 600,000 barrels having commenced in 2019 at less than 100,000 barrels. In four years, production has increased more than three-fold. We are further told that it will increase by 2028 to 1,000,000 million barrels of oil.

At the rate at which oil production is being ramped up, Guyana only has a few decades before its reserves are likely to be exhausted. The government is treating the sector as having a limited shelf life – given the assumed emphasis on phasing out fossil fuels.

But in the absence of a National Depletion Policy, it is really the oil companies and not the government which is dictating the pace of extraction. What makes the situation all the more worrying is because the government has declared that it believes it only has a narrow window to exploit its oil resources and therefore want to pump as much as oil as it can get as quickly as possible.

This plays right into the hands of the oil companies. They will plunder our oil and empty our reserves and then walk away to another location. This is consistent with what Girvan had deemed the planned displacement of supply sources.

At present, multinationals are looting Yemen’s oil. The conflict in that country has not discouraged the plunder of its oil and gas resources. In fact, oil companies are notorious for stoking conflict and benefitting from it. The Russian-Ukraine War has led to an increase in the cost of energy sources and the oil companies are profiteering from the higher prices being demand.

In other words, the oil companies will bleed Guyana dry and leave the country underdeveloped because of the lop-sided deal it secured. Having pumped out all of our oil, they will then leave to find new production sites. A recent report suggested that Exxon is shutting down in exploration and production in Mexico.

When a country’s oil is finished, the oil companies will move on. This is an ominous development for Guyana.

The oil companies have options. They can pack up when Guyana’s oil if exhausted and they can seek new supply sources in Africa.  Exxon can leave Mexico and increases its investment in Guyana. But it could also end up back in Venezuela within the next 10 years. Chevron is already in Venezuela and ramping up production there.

Exxon recently said that it plans to stay in Guyana for a long time. But that is little comfort for Guyana because the history of the oil and gas sector suggests that oil companies enjoy planned displacement of oil supplies, as the late Norman Girvan pointed out fifty-three years ago. And Guyana’s turn will come when the oil is done.

Where does this leave Guyana?  It leaves us high and dry.

Yesterday at his Press Conference Vice President Bharrat Jagdeo accused this column of lying in relation to the Norconsult Report and total emissions free electricity. This column has not been suggesting that the Amaila Falls Hydroelectric Project could not supply clean electricity. After all it is renewable energy project. What was being pointed out was that the project could not meet Guyana’s total emissions free electricity and that other renewable energy sources would have had to be developed but these would take time.

This is verbatim what the Norconsult Report said: “Amaila Falls alone cannot provide a 100% emission free power generation in Guyana. Other generating sources will have to be added in parallel like sun, wind and thermal production based on emission neutral fuel (bagasse) for back-up in the dry periods when the water flow to AFHP may be insufficient for full capacity operation.” Perhaps Jagdeo should tell the nation what were the back-up plans for the dry periods.

(The views expressed in this article are those of the author and do not necessarily reflect the opinions and beliefs of this newspaper and its affiliates.)

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• different, Multinational Corporations and Underdevelopment, Norman Girvan, Peeping Tom, production

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