By Michael Jarvis, London UK
Guyana has celebrated its first oil shipment. It has now joined the fast-lane of the hugely lucrative global oil industry.
It was to be expected that the huge global attention now being focused on Guyana as the next world oil mecca would have come at a price, albeit not in the manner now taking shape.
It’s early days yet as the Caribbean country embarks on a new course that from all indications is an unfolding economic miracle.
The immense transformation of its economy is poised to make Guyana one of the richest countries in the Caribbean and Latin America.
At some point it too will have to participate in and navigate the fossil-fuels/climate change debate.
But for now however, the focus is on economics and business.
According to one recent report, the magnitude of Guyana’s new oil sector is beyond the comprehension of many at home and in the diaspora.
THE ECONOMICS OF IT
The International Monetary Fund(IMF) is already forecasting that Guyana’s growth will explode by a rate of over 85% this year alone, compared to an average of 4.2% per year over the past ten years dating back to 2010.
The country's per capita income (the average earning per year of citizens based on the size of the economy) was US$5,250 by December last year.
That’s projected to skyrocket to around US$19,400 by the end of 2024 - in just four years.
If the trend continues, Guyana will have surpassed Barbados (US$17,800), Trinidad and Tobago($US 17, 100), Antigua and Barbuda (US$16,700) and Jamaica(US$ 5,350) in its per capita income in a few short years of a massive growth spurt.
At the other end of the spectrum are the Cayman Islands and Bermuda at $US 67,000 and $US 95,000 respectively.
Considering that Guyana’s per capita income for the period 2014 to 2018 averaged around US$4,500, it’s a remarkable prospect for the South American Caribbean state by any account.
But could it have been even more spectacular?
THE DEAL OF IT
One major global watchdog thinks so, and that has now played into the campaigning for Guyana’s upcoming elections in March.
According to a report by the Global Witness/OpenOil Guyana might have been sold short in its deal with its major oil industry partner, the American conglomerate, ExxonMobil.
It claims that the powerful, more business-experienced and oil industry-savvy oil giant “aggressively negotiated a deal with inexperienced officials that left Guyana short of up to US$55 billion.”
Under the deal, Guyana gets a 50% profit share but Global Witness/OpenOil feels this should have been up to 69%.
Guyana is set to reap US$5billion in oil profits in 2025 from ExxonMobil alone in just one of the several new oil fields discovered in its waters. It has other suitors.
Global Witness argues that the additional revenue from the ExxonMobil deal could have been used “to build much-needed roads, hospitals, schools, and sea defences to protect the 90 per cent of the population at risk from rising sea levels” and calls on the government of President David Granger of Guyana to renegotiate the deal.
THE POLITICS OF IT
But in a statement, the government has rejected the assertions of Global Witness/Open Oil, accusing it of meddling in the countries politics.
Guyana’s delayed and controversial elections are scheduled for March 2nd this year.
The current parliamentary term expired since September last year but political wrangling compounded by doubts about the validity of the voters' register and the readiness of the election machinery, led to a postponement.
The government had also previously lost no-confidence vote in December 2018.
In a statement responding to Global Witness/OpenOil, the Guyana government led by President David Granger said it “views the report as a cunning and calculated attack on a sovereign state with a duly elected Government mere weeks before an election.
“This timing cannot be seen as a coincidence and it appears as though it is seeking to influence the electoral outcome,” it alleged.
The Government defends its agreement with ExxonMobil on the basis that the deal has the blessings of credible international agencies and that it will reap enormous benefits for the people of Guyana.
It points to a contract signing bonus of US$18 million for Guyana, an additional $US300 million in foreign direct investment(FDI) plus over 1900 new jobs created in the sector.
Other indirect business and employment opportunities supporting the sector as additional bonuses.
It's not just the economics but the politics of Guyana which pivot on its newly-found oil wealth.