Guyana Pledges To Balance Oil Investment With Residents’ Economic Welfare

Guyana’s President Irfaan Ali on Tuesday defended his country’s right to develop its oil industry for its residents while insisting local goods and services requirements are not meant to block foreign investments.

A string of discoveries off its coast is on the verge of turning the tiny South American country into an oil powerhouse.

International producers, led by Exxon Mobil Corporation, have found more than 10 billion barrels of recoverable oil and gas that are poised to reshape the impoverished nation of fewer than 800,000 people.

“We welcome Exxon. We welcome investments,” Ali said at the inauguration of a week-long energy conference.

“Local growth and increased productivity must be built into the system to bring benefit to the people.”

Calls are mounting on the government to secure tangible benefits for its citizens. In one example, officials are considering a national oil company to explore new areas rather than hold an auction to bring in outside investors.

In a tumultuous session at the country’s National Assembly in December, a bill was passed requiring between 5% and 100% of energy project content to come from activities by local contractors and licensees.

Exxon Chief Executive Darren Woods said Guyana has a promising future ahead and signaled the oil company’s interest in pursuing new offshore areas and developing the country’s power supplies using gas from its offshore fields.

The Exxon-led consortium with Hess Corp and CNOOC Ltd , could expand its oil production to 1 million barrels per day by the end of the decade, Woods told a group that included executives from oil services firms’ Baker Hughes, SBM Offshore  and TechnipFMC.

“Additional exploration,” said Woods, “may present even more development opportunities” in other parts of the offshore basin.

A gas-to-power project Exxon is pursuing with the government separately could lower the nation’s cost of electricity, he said.

Exxon late last year outlined an onshore supply base expected to expand jobs and boost local fabrication starting with its fourth production unit. The project could bring total investment in Guyana to $30 billion. 

Energy projects often take longer to be developed than a government term of office, leading to upheaval when a change of administrations occur, said Johan Sydow, a project manager at Hope Energy Development, which is developing a 25 megawatt wind energy project in the country backed by the World Bank.

“Lots of projects get terminated when government changes,” said Sydow. “We ran into red tape. We are in the government plan, but we don’t know when it will move forward,” he added.

“Everyone is related; the community is very small, (and) you are always two steps away from a politician,” Sydow said.

Source: Reuters