Page 4 - LatAmOil Week 34 2021

COMMENTARY Y
LatAmOil COMMENTAR LatAmOil

ExxonMobil’s Stabroek block (Image: ExxonMobil)

On Guyana’s future prospects

IEEFA, a US-based non-profit, says the Stabroek contract may unfairly curb Guyana’s earnings

from oil sales. Its arguments may have the effect of drying up funding for future investors

BHARRAT Jagdeo, the Vice-President of Guy- reasons to worry about just how much Guyana
ana, has expressed confidence that his country’s stands to gain from oil development.
WHAT: burgeoning oil industry will help pave the way
A recent report has drawn for economic growth and improvements in the How and when will Guyana benefit?
attention to contractual standard of living. Last month, a US-based non-profit organisation
provisions that allow Speaking during an online presentation at known as the Institute for Energy Economics
Stabroek’s developers to the Offshore Technology Conference in Hou- and Financial Analysis (IEEFA) published a
take a share of Guyana’s ston last week, Jagdeo said that Guyana’s pop- report on the contract that ExxonMobil (US)
oil earnings to recoup ulation, which numbers around 800,000, had a and its partners signed for the Stabroek block
exploration outlays.
“legitimate expectation” that prosperity would in July 2016.
follow offshore oil development. This sentiment IEEFA examined this contract because
WHY: is justified because oil revenues and investments Stabroek is, to date, the only offshore Guy-
Criticism of the provision
appears to be overstated, will pump more money into the Guyanese econ- anese block where commercially viable oil
but it may draw negative omy, thereby creating opportunities for other reserves have been discovered – and the only
attention to the project. sectors of the economy to flourish and new busi- block to have reached first oil. (This occurred
nesses to be launched, he commented. in December 2019, when the Liza-1 field went
WHAT NEXT: The vice-president also asserted that Guyana into production.) In the report, it claimed that
ExxonMobil and other did not have to fear the possibility that oil-driven its examination ought to raise questions about
investors may eventually prosperity might prove fleeting because of plans when and to what extent the project might actu-
find themselves strug- for switching to renewable energy sources that ally help the country’s economy – and about
gling to secure funding. generate less carbon dioxide. “The world will whether, in the end, it would deliver any eco-
continue to use fossil fuels for the foreseeable nomic benefits at all.
future,” he said, according to a report from S&P The organisation based its claims on a provi-
Global Platts. “Even if we freeze all new invest- sion in the contract that allows ExxonMobil and
ments now, there’s still a $4 trillion-dollar indus- its partners to charge up to 100% of exploration
try producing oil and gas for world demand.” costs occurred anywhere within the Stabroek
Beyond concerns about greenhouse gas block against active wells in other sections of
(GHG) emissions, though, there may be other the licence area.

P4 www. NEWSBASE .com Week 34 26•August•2021