Even though the implementation of a depletion policy would help Guyana slow down the rate of production of its oil resources by ExxonMobil, thereby giving it some much needed time to develop its regulatory capacity, Vice President, Dr. Bharrat Jagdeo, does not seem to be too keen on the nation following this approach.
During his last press conference that was held at the Arthur Chung Convention Centre, Dr. Jagdeo told Kaieteur News that the government is not interested in using such a mechanism that could potentially put a pause on the rate of development of the oil. The official who has oversight responsibility for the oil sector said one has to bear in mind that Guyana has a short window within which to develop and monetize its resources. He reminded that the International Energy Agency (IEA) would have noted that even with an aggressive transition to cleaner sources of energy like hydropower and solar energy, the world will still need a considerable amount of fossil fuels in the future. In such a scenario, Jagdeo cautioned that Guyana still has to compete with others, even though it is in a privileged position as a low cost producer.
The official said, “…We have a window within which we have to maximize our production and utilize the resources for the development our country and our people and we want to accelerate production at that level.”
While he is in favour of aggressive exploration and production, Jagdeo also noted that Guyana’s pace of developing its capacity to govern needs to be on the same tangent. “And we don’t have 100 years to do it. By the time we develop the capacity, they can find one breakthrough technology and then you can’t produce the oil so we are making it clear that development and capacity building have to run simultaneously…” the Vice President expressed.
He said that the government expects the oil companies to make more meaningful contributions towards the training of locals to manage the sector, noting that the paltry US$300,000 ExxonMobil is required by its Stabroek Block contract to pay for training is insufficient.
Institutions such as the World Bank, the United Nations Development Fund (UNDP), and the International Monetary Fund (IMF), have all acknowledged that the authorities of the day have the fundamental right to determine how fast or how slow their country’s oil and gas resources should be developed.
In fact, the UNDP had commissioned a report in 2016 for Guyana, which recommended that the government pay attention to the rate at which the oil resources could be depleted. The adoption of a policy that regularizes the pace of production by ExxonMobil and other oil companies operating offshore Guyana was also suggested. The former APNU+AFC regime had pledged to bring such a document on board using funds from the Inter-American Development Bank but this never became a reality.
In the absence of this crucial policy, ExxonMobil and its partners, Hess Corporation and CNOOC/NEXEN, are forging ahead with plans to extract Guyana’s oil as quickly as possible from the Stabroek Block. In fact, Exxon is already ramping up its development plans for its third project called Payara. Now that approximately nine billion oil equivalent resources have been discovered on the Stabroek Block, the partners have said that it is more than enough to support 10 vessels. Five of these are planned to come on stream by 2026.