Logo
Cover

Guyana oil boom

Between Venezuela and Surinam lies Guyana. It has almost 780,000 inhabitants, who live from mining and agriculture, and a GDP of 6.2 billion dollars.

On the corruption index, Guyana ranks 85th out of 180 countries, and there are doubts about the legality of the last presidential election on 2 March 2020. The national debt is over 50 percent. Until now.

As the only country in the two Americas and one of the few in the World, Guyana will grow strongly this year. Announced is economic growth of a whopping 53 percent. By 2018, the figure was under five percent.

The Oil changes everything

Since 2015 rich oil deposits were discovered off the coast of Guyana, everything is different. About eight billion barrels lie dormant beneath the seabed – one of the largest untapped oil fields in the world. Poor Guyana could soon become one of the richest oil – producing countries-a kind of Qatar in the deep West. Not even the country’s political problems change that.

Of course, a country like Guyana does not produce oil alone. In addition to ExxonMobil, the U.S.-based Hess Corporation and China’S state-owned CNOOC are working to develop the oil field.

Guyana

Since the oil boom began, the Guyanese government has been trying to prepare its country. After neighbourhood disputes with Surinam over the course of the maritime borders had been settled, laws had to be enacted, regulations had to be drawn up and the financial infrastructure had to be built up.

A country like Guyana does not do this on its own. The World Bank with 55 million dollars helped to restructure the legislation, and it provided an additional 35 million dollars for the banking and insurance sector, which will soon have to cope with the expected billions of dollars in profits.

Financing fossil resources-wasn’t there something?

Some of this money went into consulting services to help the government of Guyana, which was inexperienced in these matters. External consultants should accompany the conversion. In this way, the World Bank financed, among other things, support from the law firm “Hunton Andrews Kurth”. The slightly poignant Detail: the biggest client of “Hunton Andrews Kurth” has been ExxonMobil for a long time. Some other contractors also have connections to Exxon.

Several organizations criticize this and another obvious conflict of interest. In accordance with the Paris climate agreement of 2015, the World Bank has committed itself to no longer financing the production of fossil raw materials. To participate in the construction of a gigantic oil field contradicts this commitment. The World Bank justifies itself that it did not put money directly into the development of the oil field with the financing.

Oil Lobbyist advises government on regulating oil production

Secondly, it really cannot turn out well when a company whose main income for decades comes from a large oil company dictates laws for oil production, taxation and environmental protection to a small South American country.

The profit of” Hunton Andrews Kurth " may be far more dependent on the oil industry than on the country for which it proposes laws, says Philip Nichols, who teaches ethics and law at the University of Pennsylvania. The organization “Urgewald” has identified several conflicts of interest and contacted the World Bank.

Inexperienced government nods off unfavorable Deal

Even the licensing agreements negotiated by the inexperienced government with ExxonMobil over an area known as the “Stabroek Block” are not advantageous for the country despite the expected flood of money.

Guyana

The deal Guyana has negotiated with ExxonMobil could be better, according to “OpenOil”.

Guyana escaped 55 billion dollars over the entire term, 1.3 billion per year, found “Global Witness” and refers to an analysis of “OpenOil”. The Guyanese government should immediately renegotiate the license terms, the NGO recommends.

Guyana will need oil profits-because of climate change

Even if this involves a lot of money – Guyana will urgently need the additional profits from the oil trade. Not only because the country is so far one of the poorest in South America. The country’s health infrastructure leaves much to be desired, roads are missing and many schools are dilapidated.

The majority of the population lives in the low-lying coastal areas, the rest of Guyana consists of hardly inhabited primeval forests. The isolated mines are hardly connected to the capital. Due to climate change and The Associated rising sea levels, the population is threatened by floods and land loss at least in the medium term. These are largely caused by Big Oil.