With the production of 500,000 barrels a day for 300 days a year at US$40 a barrel, the annual income would be US$6 billion. The cost of production of oil varies widely, depending on whether it is onshore or offshore and if offshore, how far away and how deep. To give some idea North Sea oil was produced by BP in 2014 at US$30 a barrel. It went down to US$15 a barrel in 2017 and is expected to go down to US$12 a barrel by 2020. The estimated cost of production in offshore Guyana has not been made known by either the Government or ExxonMobil. We are therefore left to speculate.
Assuming that a maximum of about half of the income would be deducted as production costs, US$3 billion would be deducted as production costs from an annual income of US$6 billion. Guyana would earn 50 percent of the profit, that is, US$1.5 billion plus 2 percent of US$6 billion as royalty which would add another US$120 million. At minimum, therefore, Guyana’s economy would double. More likely than not, Guyana’s economy would grow to three times its current size and even more, if the price remains around US$60 per barrel and if more discoveries are made resulting in higher production. ExxonMobil has drilled only eight wells in seven of which oil was discovered. It plans to drill another twenty. There are also other blocks to be explored by other oil companies and other blocks yet to be given out for exploration.
Being away for the past six weeks allowed me the luxury of leisurely contemplating Guyana from afar. The news emerging was not encouraging. The prison was burnt down and prisoners escaped; then more escaped from Lusignan. A disaster waiting to happen, it was said, but nothing of significance was done to prevent it. Perceptions of the Constitution, where it differed from the Court’s, were given equal weight. Secret dealings with ExxonMobil are justified on blatantly flawed and trivial excuses. Budget allocations are not being disbursed thus limiting economic activity and job creation. Rupert Roopnaraine resigned, then changed his mind.
Freddie Kissoon and Kaieteur News continue their decades long, personal, vendetta against me, because of an apology he and KN were forced to make to me more than twenty years ago. In pursuance of his hate campaign, Kissoon regurgitates stories that I have already fully answered ten and more years ago – answers which he does not reveal when he rambles on, ad nauseam.
The campaign against the unilateral and undemocratic imposition of parking meters in Georgetown is at last bearing fruit. The Government has been persuaded to intervene and had asked the City Council to suspend the operation of the contract until a renegotiation of its terms can be effected. At a time when the Government has been taking criticism for being indecisive, it has shown commendable resolve in this matter, even though a bit late.
The campaign against the parking metes was sustained by the outrage of citizens at the exorbitant charges imposed. These charges are simply not affordable by most of the people who are employed in Georgetown and travel to work in their motor cars. The same case that has been made by teachers at Bishops High and staffers at the Bank of Guyana, who were given free parking by Smart City Solutions (SCS), applies to most others.
Public rage in Georgetown continues to grow and expand as last Thursday’s massive demonstration shows, even as the Government has finally been forced to intervene in the parking meter fiasco. But it is too little too late. Boat gone a’ fall. The demand is now for the rescinding of the flawed agreement between the City Council and SCS.
The Government faltered when it allowed the City Council to proceed with the parking meter secret project, with charges that were outrageously high – 37 percent of the average monthly salary in Guyana as compared with a high of 13 percent of the monthly salary in the US. After the meeting between the Government and the City Council, the Government did not call for the release of the secret agreement. That is a telling omission.
Three of the four dailies on Friday headlined the second oil find by ExxonMobil at a well called Payara-1. Past predictions about the presence of petroleum deposits in off-shore Guyana were confirmed when ExxonMobil’s announced its world class discovery, the largest for 2016, at its Liza well. If the Payara-1 turns out to be large, then the predictions of much greater deposits in the area could be accurate and much more oil could be found.
The amount of petroleum deposits that have already been found is enough to transform Guyana. But somehow Guyanese do not yet appear to be impressed. Casual conversations with Guyanese suggest that the cynicism that has developed from decades of promises based on Guyana’s agricultural potential, that Guyana could become the bread basket of the Caribbean and Guyana’s failure to take off economically, continues to exist. When told about the prospect of oil wealth for Guyana, and what it could mean for the future, many Guyanese are dismissive and unbelieving.
The truth is that Guyana would be transformed and we need to choose how. It would not happen overnight, of course, but by 2025 Guyanese would be feeling the impact of the oil income, which would continually increase. The Government appears to be making preparations to establish the legal framework and institutional mechanisms. There is no evidence that it is making any effort to reach out to the Opposition to build consensus from the earliest stage. If the Government wants political and national consensus going forward, it needs to start consultations with the Opposition early or face the possibility of a perennially contentious situation for our oil industry. Former Minister of Energy of Trinidad and Tobago, Kevin Ramnarine, speaking in Guyana recently, urged the establishment of a national oil and gas company to manage the oil industry, whose leadership should be insulated from politics. While this is easier said than done, it can be accomplished if the effort starts now.