Guyana is on the threshold of a major economic transformation as new oil discoveries continue to be made in its waters with startling regularity.
Explorations led by the American conglomerate ExxonMobil are projecting Guyana as a potential major player in the global oil industry given the vast quantities of oil deposits being located in its coastal waters.
Already its projected that in the coming years Guyana could become second to neighbouring Brazil in oil production in Latin America, displacing its other neighbour Venezuela with whom it has a contentious relationship.
Venezuela, irrespective of which government is in power in Caracas, has had a long-standing claim to almost two-thirds of Guyana including some of the areas now being explored as lucrative oil fields.
The dispute is being arbitrated at the International Court of Justice via the United Nations.
Venezuela which has the world’s largest oil reserves has been unable to reap the economic benefits due to internal political strife which has just about crippled its economy.
Guyana would be mindful of that.
While its oil reserves are estimated in the region of 13 million barrels and Venezuela’s at 300 million barrels, Guyana’s reserves still put it in the top 20 and just about tied with Brazil ranked at 14th.
But as seen with Venezuela and some other countries with considerable oil reserves, converting that into actual lucrative production and then reaping the economic and social benefits, sometimes tend not to go hand in hand.
That is the big challenge for Guyana.
Regarded in the 1960s as the ‘breadbasket of the Caribbean’ due to its then buoyant agriculture sector, Guyana saw that industry, its economy and regional status decline due to a combination of internal ideological shifts, poor economic management - and meddling by external powers.
At present, the country is navigating through a political turmoil that is putting its democratic organs to the test. A controversial motion of no-confidence against the government of President David Granger has been upheld by an appeals court ruling.
Elections expected to be held in March due to the outcome of the no-confidence motion, are now being rescheduled to allow more time for preparation.
The handling of this political crisis up to this point shows that Guyana’s democracy is intact and quite capable to respond to such challenges.
But bigger challenges loom.
Venezuela, despite its own problems at home, recently challenged the presence of Exxon Mobil oil research vessels assigned to Guyana, which it claimed were operating within its territorial boundaries.
Guyana rejected that assertion and was adamant that the vessels were in its waters.
The United States chided Venezuela for behaving aggressively, Venezuela in turn accused the US of plotting to destabilise it.
Meanwhile, Venezuela’s claim to a large chunk of Guyana - just about the only thing the opposing political sides in Venezuela seem to agree on - remains unresolved.
Venezuela’s domestic political crisis has attracted international attention - and the likelihood of involvement - with major global powers sitting on opposite sides of that country’s political divide.
Coincidentally, there is a recent suggestion by the British Defence Minister for Guyana to be considered as the location of a possible post-Brexit UK naval base in the Caribbean. The other suggested location was the British overseas territory, Montserrat.
To what extent that is likely to materialise, remains to be seen. Naval bases are not built overnight, nor is oil extraction an overnight process, although oil production could start in Guyana possibly within the next year or two by some schedules.
In addition to ExxonMobil, several other major global players in the oil industry are either already in Guyana, or are planning their entry with the hope of cashing in on the petroleum version of the American gold rush.
Among them are the UK’s BP, the American Chevron, France’s TOTAL, ENI of Italy, and Exxon’s partners Hess Oil and Nexen of China.
With so much at stake, diplomatic and commercial interests must be delicately managed to the benefit of not only the investors but also to the national interest of the government and people of Guyana.
As stated recently by Guyana’s Director of Energy, Dr Mark Bynoe:
“The real substance of these finds will come when all Guyanese are able to benefit from these discoveries, whether directly and/or indirectly.”
The former breadbasket of the Caribbean seems on its way to reinventing itself as the petrol station of the Caribbean with all which that implies…barring any oil slicks.
Curiously Guyana was one of the Caribbean countries which was a beneficiary of the Venezuelan Chavez-era PetroCaribe oil concessions, a diplomatic outreach oiled by, well…oil.
But with Venezuela tottering precariously on the brink of bankruptcy, PetroCaribe has quite literally run out of gas.
Might Guyana take up the slack?