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Guyana’s vast oil wealth on hold

Regional 07 Oct, 2020 Follow News

Guyana’s future oil wealth is in limbo and uncertain

Guyana’s recent find of massive oil supply was supposed to create great wealth for all its citizens, but the global pandemic has put that on long pause.

Guyana had high hopes economically this year after ExxonMobil discovered huge oil deposits off its coast in 2015. Guyana sold its first cargo of crude oil in February. As production ramped up, production projections of 750,000 barrels a day by 2025, meant Guyana's economy would increase from US$3.4 billion to $13bn.

Guyana also received its first US secretary of state visit, from Mike Pompeo last month.

But Guyana’s dreams of fabulous wealth this year have been dashed by COVID-19, which has delayed production and slashed oil demand. Compounding its coronavirus troubles, Guyana shows warning signs of the so-called “resource course” in which a country’s new oil wealth crowds out other productive economic sectors, breeds corruption and triggers political conflict.

If oil prices stay low, more countries could join the list of troubled petro-nations.

Guyana’s population of 786,000 already struggles with political instability and ethnic tensions. In March, in the first national election held since oil was discovered, accusations of corruption prompted a recount and an unclear presidential result. The transfer of power dragged for five months, leading to deep uncertainty, violence and eventually US sanctions.

Guyana’s new president, Mohamed Irfaan Ali, finally took office in August. He campaigned on the issue of oil governance, asserting that his predecessor David Granger had agreed to overly generous contracts with foreign oil investors, Ali promised to get Guyana its fair share of oil revenues.

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