As ExxonMobil Guyana is celebrating 5 years of oil production from the Liza Destiny FPSO, it is a good time to take a look at the potential and the problem of the country’s fast-growing oil and gas sector.
ExxonMobil on behalf of Hess and CNOOC has placed Guyana at the top of the list of emerging oil producer countries with Stabroek Block.
Currently increasing its output to over 600,000 barrels per day and anticipated establishment of five more offshore fields by 2030, the scope of activity is massive for such a small country in the Caribbean region.
Economic improvement has been significant
According to ExxonMobil, this improvement has been the largest sponsor of Guyanese workers paying as high as 6,000 workers, with $2 trillion invested in local goods and services, benefitted over 1,700 businesses.
How much of this wealth is actually invested and fructified into enhancing quality of life for the masses?
Under the Production Sharing Agreement (PSA) signed in 2016, Guyana profits from the 26,800 kilometres square area the country made available for oil drilling through the agreement, only earned a maximum of 14.5% of the revenues that include 75% for cost recovery.
And though in the newer PSA framework that the PPP/C Government brings in light that terms such as reducing the cost recovery ceiling to 65% alongside raising the royalties to 10%, all these concerns pertain to future contracts only.
Alike Economical indicators, Environmental issues are most critical
Multiple Floating Production Storage and Offloadings (FPSOs) are already in use in Guyana’s offshore environment, and concerns regarding oil spill risk mitigation and management of ecological impacts continue.
According to the company’s present President, Alistair Routledge, there is a directly aligned aspiration with the government for sustainable development.
However, the drastic forms of change pose various issues such as the level of transparencies and the level of equality in distribution of wealth.
Thus, it is the narrative of a success story and a warning tale for the developing, oil-endowed countries on their way to globalization of the global energy markets.
