Guyana’s Offshore Oil Boom Faces Headwinds As Gov’t Breaches Constitution

Guyana’s oil industry may be facing a tough road ahead, after US and European diplomats on Thursday accused the Guyana government of breaching the country’s constitution according to Reuters.

Guyana is just months away from first oil, and everyone has had high expectations of its oil riches. But now its President, David Granger, is being called on to set a date “immediately” for brand new elections, lest it find itself cut off from development funds.

New elections, according to Guyana’s independent electoral body, are now ready to be held in February, which coincides with the timeline for first oil. Granger had previously stated that it needed time to formalize its voter registry, but the international community is growing impatient with the South American country’s foot-dragging ways.

Political uncertainties aside, Guyana’s prospect for oil looks great. ExxonMobil has struck find after find—more than a dozen, in fact–that now total over 6 billion oil-equivalent barrels. Its latest find the Tripletail-1 well where it will serve as operator with Hess and CNOOC as partners.

The upcoming and much-delayed elections are critical to its fledgling oil industry, which will set the tone going forward as to just how Guyana will handling the revenue from the oil industry and how it will handle contracts with foreign players. The existing laws on the books regarding its petroleum are decades old, before Exxon had struck it bigtime on what many consider was a longshot.

And we’re talking about a lot of oil. Per citizen, Guyana could potentially produce more oil than any other country. So it’s that much more important that Guyana get it right this time around, after many had criticized the government for handing Exxon a sweetheart deal, including the IMF, who called on Guyana authorities to revise their tax laws for any oil contracts going forward, describing the royalty rates as “bellow well” what is observed internationally.

“The prevailing political uncertainty undermines Guyanese institutions, compromises economic opportunities and delays developments” diplomats from the US, Britain, and the EU said in a Thursday statement, cited by Reuters.