Oil boom transforming Guyana - Trinidad Guardian Trinidad and Tobago Guardian Online

Monday, January 13, 2025

Oil boom transforming Guyana

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618 days ago
20230507

ANN’S GROVE, Guyana (AP) — Vil­lagers in this tiny coastal com­mu­ni­ty lined up on the sog­gy grass, leaned in­to the mi­cro­phone and shared their griev­ances as some­one in the crowd yelled, “Speak the truth!”

And so they did. One by one, speak­ers list­ed what they want­ed: a li­brary, street­lights, school bus­es, homes, a gro­cery store, re­li­able elec­tric­i­ty, wider roads and bet­ter bridges.

“Please help us,” said Evadne Pellew-Fo­mundam—a 70-year-old who lives in Ann’s Grove, one of Guyana’s poor­est com­mu­ni­ties—to the coun­try’s prime min­is­ter and oth­er of­fi­cials who or­gan­ised the meet­ing to hear peo­ple’s con­cerns and boost their par­ty’s im­age ahead of mu­nic­i­pal elec­tions.

The list of needs is long in this South Amer­i­can coun­try of 791,000 peo­ple that is poised to be­come the world’s fourth-largest off­shore oil pro­duc­er, plac­ing it ahead of Qatar, the Unit­ed States, Mex­i­co and Nor­way. The oil boom will gen­er­ate bil­lions of dol­lars for this large­ly im­pov­er­ished na­tion. It’s al­so cer­tain to spark bit­ter fights over how the wealth should be spent in a place where pol­i­tics is sharply di­vid­ed along eth­nic lines: 29 per cent of the pop­u­la­tion is of African de­scent and 40 per cent of East In­di­an de­scent, from in­den­tured ser­vants brought to Guyana af­ter slav­ery was abol­ished.

Change is al­ready vis­i­ble in this coun­try, which has a rich Caribbean cul­ture and was once known as the “Venice of the West In­dies.” Guyana is criss­crossed by canals and dot­ted with vil­lages called “Now or Nev­er” and “Free and Easy” that now co-ex­ist with gat­ed com­mu­ni­ties with names like “Wind­sor Es­tates.” In the cap­i­tal, George­town, build­ings made of glass, steel and con­crete rise above colo­nial-era wood­en struc­tures, with shut­tered sash win­dows, that are slow­ly de­cay­ing. Farm­ers are plant­i­ng broc­coli and oth­er new crops, restau­rants of­fer bet­ter cuts of meat, and the gov­ern­ment has hired a Eu­ro­pean com­pa­ny to pro­duce lo­cal sausages as for­eign work­ers trans­form Guyana’s con­sump­tion pro­file.

With US$1.6 bil­lion in oil rev­enue so far, the gov­ern­ment has launched in­fra­struc­ture projects in­clud­ing the con­struc­tion of 12 hos­pi­tals, sev­en ho­tels, scores of schools, two main high­ways, its first deep-wa­ter port and a US$1.9 bil­lion gas-to-en­er­gy project that Vice Pres­i­dent Bhar­rat Jagdeo told The As­so­ci­at­ed Press will dou­ble Guyana’s en­er­gy out­put and slash high pow­er bills by half.

And while the projects have cre­at­ed jobs, it’s rare for Guyanese to work di­rect­ly in the oil in­dus­try. The work to dig deep in­to the ocean floor is high­ly tech­ni­cal, and the coun­try doesn’t of­fer such train­ing.

Ex­perts wor­ry that Guyana lacks the ex­per­tise and le­gal and reg­u­la­to­ry frame­work to han­dle the in­flux of wealth. They say it could weak­en de­mo­c­ra­t­ic in­sti­tu­tions and lead the coun­try on a path like that of neigh­bour­ing Venezuela, a pet­rostate that plunged in­to po­lit­i­cal and eco­nom­ic chaos.

“Guyana’s po­lit­i­cal in­sta­bil­i­ty rais­es con­cerns that the coun­try is un­pre­pared for its new­found wealth with­out a plan to man­age the new rev­enue and eq­ui­tably dis­burse the fi­nan­cial ben­e­fits,” ac­cord­ing to a US­AID re­port that ac­knowl­edged the coun­try’s deep eth­nic ri­val­ries.

A con­sor­tium led by Exxon­Mo­bil dis­cov­ered the first ma­jor oil de­posits in May 2015 more than 100 miles (190 kilo­me­tres) off Guyana, one of the poor­est coun­tries in South Amer­i­ca de­spite its large re­serves of gold, di­a­mond and baux­ite. More than 40 per cent of the pop­u­la­tion lived on less than US$5.50 a day when pro­duc­tion be­gan in De­cem­ber 2019, with some 380,000 bar­rels a day ex­pect­ed to soar to 1.2 mil­lion by 2027.

A sin­gle oil block of more than a dozen off Guyana’s coast is val­ued at US$41 bil­lion. Com­bined with ad­di­tion­al oil de­posits found near­by, that will gen­er­ate an es­ti­mat­ed US$10 bil­lion an­nu­al­ly for the gov­ern­ment, ac­cord­ing to US­AID. That fig­ure is ex­pect­ed to jump to US$157 bil­lion by 2040, said Rys­tad En­er­gy, a Nor­we­gian-based in­de­pen­dent en­er­gy con­sul­tan­cy.

Guyana, which has one of the world’s high­est em­i­gra­tion rates with more than 55 per cent of the pop­u­la­tion liv­ing abroad, now claims one of the world’s largest shares of oil per capi­ta. It’s ex­pect­ed to have one of the world’s fastest-grow­ing economies, too, ac­cord­ing to a World Bank re­port.

The trans­for­ma­tion has lured back Guyanese such as An­drew Ram­per­saud, a 50-year-old gold­smith who left Trinidad last Ju­ly with his wife and four daugh­ters, en­cour­aged by changes he saw in his coun­try.

He makes some 20 pairs of ear­rings and four neck­laces a day, most­ly with Guyanese gold, but where he’s re­al­ly no­ticed a dif­fer­ence is in re­al es­tate. Ram­per­saud owns sev­en rental units, and be­fore the oil dis­cov­ery, he’d get a query every month or so

Now, three to four peo­ple call dai­ly. And, un­like be­fore, they al­ways pay on time in a coun­try where a two-bed­room apart­ment now costs US$900, triple the price in 2010, ac­cord­ing to Guyana’s Re­al Es­tate As­so­ci­a­tion.

But many Guyanese, in­clud­ing those liv­ing in Ann’s Grove, won­der whether their com­mu­ni­ty will ever see some of that wealth. Here, bleat­ing goats am­ble down the vil­lage’s main road, wide enough for a sin­gle car or the oc­ca­sion­al horse-drawn cart. Dogs dart through wood­en homes with zinc roofs, and the sole mar­ket­place where ven­dors once sold fruits and veg­eta­bles is now a makeshift broth­el.

“I ex­pect­ed a bet­ter life since the drilling be­gan,” said Fe­lasha Dun­can, a 36-year-old moth­er of three who spoke as she got bright pink ex­ten­sions braid­ed in­to her hair at an open-air sa­lon.

Down the road, 31-year-old Ron Collins was busy mak­ing cin­derblocks and said he didn’t both­er at­tend­ing the re­cent Sat­ur­day morn­ing meet­ing with of­fi­cials.

“It makes no sense,” he said, lean­ing on his shov­el.

He doesn’t be­lieve his vil­lage will ben­e­fit from the on­go­ing projects that have em­ployed peo­ple such as Shaquiel Pereira, who’s help­ing build one of the new high­ways and earn­ing dou­ble what he did three months ago as an elec­tri­cian. The 25-year-old bought land in west­ern Guyana last month and is now sav­ing to build his first home and buy a new car.

“I feel hope­ful,” he said as he scanned the new high­way from his car, paus­ing be­fore the hour-long dri­ve home.

His boss, en­gi­neer Arif Hafeez, said that while peo­ple aren’t see­ing oil mon­ey di­rect­ly in their pock­ets by way of pub­lic wage in­creas­es, con­struc­tion projects that are gen­er­at­ing jobs and new roads will boost the econ­o­my.

“They say it’s go­ing to look like Dubai, but I don’t know about that,” he said with a laugh.

At a job fair at the Uni­ver­si­ty of Guyana, ex­cite­ment and cu­rios­i­ty were in the air as stu­dents met with oil com­pa­nies, sup­port and ser­vices firms, and agri­cul­tur­al groups.

Greet­ing stu­dents was Sher­ry Thomp­son, 43, a for­mer hos­pi­tal switch­board op­er­a­tor and man­ag­er of a lo­cal inn who joined a com­pa­ny that pro­vides ser­vices such as trans­porta­tion for vice pres­i­dents of ma­jor oil com­pa­nies.

“I felt like my life was go­ing nowhere, and I want­ed a fu­ture for my­self,” Thomp­son said.

Jobs like hers have be­come plen­ti­ful, but it’s rare to find Guyanese work­ing di­rect­ly in the oil in­dus­try.

Richie Bachan, 47, is among the ex­cep­tions. As a for­mer con­struc­tion work­er, he had the foun­da­tion, with some ad­di­tion­al train­ing, to be­gin work­ing as a roustabout, as­sem­bling and re­pair­ing equip­ment in the off­shore oil in­dus­try two years ago. His salary tripled, and his fam­i­ly ben­e­fits: “We eat bet­ter. We dress bet­ter. We can keep up with our bills.”

But be­yond the slate of in­fra­struc­ture projects and jobs they’re cre­at­ing, ex­perts warn the huge wind­fall could over­whelm Guyana.

“The coun­try isn’t prepar­ing and wasn’t pre­pared for the sud­den dis­cov­ery of oil,” said Lu­cas Perel­ló, a po­lit­i­cal sci­ence pro­fes­sor at New York’s Skid­more Col­lege.

Three years af­ter the 2015 oil dis­cov­ery, a po­lit­i­cal cri­sis erupt­ed in Guyana, which is dom­i­nat­ed by two main par­ties: the In­do-Guyanese Peo­ple’s Pro­gres­sive Par­ty and the Afro-Guyanese Peo­ple’s Na­tion­al Con­gress, which formed a coali­tion with oth­er par­ties.

That coali­tion was dis­solved af­ter a no-con­fi­dence mo­tion ap­proved by a sin­gle vote in 2018 gave way to snap gen­er­al elec­tions in 2020. Those saw the In­do-Guyanese Peo­ple’s Pro­gres­sive Par­ty win by one seat in a race that’s still be­ing con­test­ed in court.

“That’s why the 2020 elec­tions were so im­por­tant. Every­one knew what was at stake,” Perel­ló said.

The US­AID re­port ac­cused the pre­vi­ous ad­min­is­tra­tion of a lack of trans­paren­cy in ne­go­ti­a­tions and oil deals with in­vestors, adding that the “tremen­dous in­flux of mon­ey opens many av­enues for cor­rup­tion.”

When The As­so­ci­at­ed Press asked Prime Min­is­ter Mark Phillips about con­cerns over cor­rup­tion, his press of­fi­cers tried to end the in­ter­view be­fore he in­ter­ject­ed, say­ing his par­ty had a ze­ro-tol­er­ance pol­i­cy: “Wher­ev­er cor­rup­tion ex­ists, we are com­mit­ted to root­ing it out.”

Guyana signed the deal in 2016 with the Exxon­Mo­bil con­sor­tium, which in­cludes Hess Cor­po­ra­tion and Chi­na’s CNOOC, but did not make the con­tract pub­lic un­til 2017 de­spite de­mands to re­lease it im­me­di­ate­ly.

The con­tract dic­tates that Guyana would re­ceive 50 per cent of the prof­its, com­pared with oth­er deals in which Brazil ob­tained 61 per cent and the US 40 per cent, ac­cord­ing to Rys­tad En­er­gy. But many have crit­i­cised that Guyana would on­ly earn 2 per cent roy­al­ties, some­thing Jagdeo said the cur­rent gov­ern­ment would seek to in­crease to 10 per cent for fu­ture deals.

“The con­tract is front-loaded, one-sided and rid­dled with tax, de­com­mis­sion­ing and oth­er loop­holes that favour the oil com­pa­nies,” ac­cord­ing to a re­port from the Ohio-based In­sti­tute for En­er­gy Eco­nom­ics and Fi­nan­cial Analy­sis.

Aubrey Nor­ton, leader of the op­po­si­tion Peo­ple’s Na­tion­al Con­gress that was part of the coali­tion that signed the deal, told AP that it made mis­takes: “I have no doubt about that. And there­fore, mov­ing for­ward, we should rec­ti­fy those mis­takes.”

Ac­tivists al­so have raised con­cerns that the oil boom will con­tribute to cli­mate change, giv­en that one bar­rel of fu­el oil pro­duces on av­er­age about 940 pounds (about 425 kilo­grams) of car­bon diox­ide, ac­cord­ing to the US En­vi­ron­men­tal Pro­tec­tion Agency.

AP reached out to Exxon­Mo­bil for com­ment about how it han­dled the deal in Guyana and en­vi­ron­men­tal con­cerns. Through com­pa­ny spokes­woman Meghan Mac­don­ald, Exxon­Mo­bil’s top of­fi­cial in Guyana agreed to an in­ter­view. But Mac­don­ald re­peat­ed­ly can­celed, and the com­pa­ny of­fered no oth­er com­ment to AP.

Nor­ton said he was con­cerned about the cur­rent gov­ern­ment’s fo­cus on build­ing in­fra­struc­ture in­stead of de­vel­op­ing peo­ple, adding that he wor­ries the oil wealth will in­ten­si­fy eth­nic di­vi­sions in Guyana and cre­ate oth­er prob­lems: “It will re­sult in the rich get­ting rich­er and the poor get­ting poor­er.”

Jagdeo, the vice pres­i­dent who once served as pres­i­dent, told AP that his par­ty has cre­at­ed a spe­cial fund for oil rev­enues with safe­guards to pre­vent cor­rup­tion, in­clud­ing ap­point­ment of an in­de­pen­dent mon­i­tor and a board of di­rec­tors to over­see the fund along with the fi­nance min­is­ter.

Par­lia­men­tary ap­proval al­so is need­ed to de­cide how the funds would be used, he said, adding that oil rev­enues cur­rent­ly rep­re­sent on­ly a third of Guyana’s bud­get and that in­creas­es in salaries might hap­pen lat­er: “At this point in time, we are not awash with mon­ey.”

“We have seen the mis­takes made by oth­er coun­tries,” he said. “We have to be cau­tious.”

De­spite the oil boom, pover­ty is deep­en­ing for some as the cost of liv­ing soars, with goods such as sug­ar, or­anges, cook­ing oil, pep­pers and plan­tains more than dou­bling in price while salaries have flat­lined.

Many are still scrap­ing by, like Samuel Arthur, who makes US$100 a month sell­ing large, heavy-du­ty plas­tic bags in George­town and oth­er ar­eas, haul­ing some 40 pounds of weight every day.

“All we live on is promis­es,” he said of the oil boom. “I have to do this be­cause I don’t have any oth­er way to sur­vive.”

It’s the kind of need fa­mil­iar to many in Ann’s Grove.

When the meet­ing be­tween res­i­dents and of­fi­cials end­ed, the prime min­is­ter pledged that most re­quests would be ful­filled.

“Look­ing for­ward to your promise,” res­i­dent Clyde Wick­ham said. Of­fi­cials nod­ded and vowed to re­turn with more de­tails on how they’ll help Ann’s Grove.

Hope­ful res­i­dents clapped. Like Wick­ham, many say they’ll work to hold the gov­ern­ment to its word.


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