A political risk analyst in the oil and gas industry said today at an energy conference in California that while the Guyana Gov’t is “sending right signals” and appears to be “pro-business” the critical issue of transparency in the South American country still looms.
Senior Analyst for the Andean Region, Raul Gallegos, of Control Risks’ Global Risk Analysis, said his organization is tasked with advising companies about the risk they face on the ground from communities, NGOs, governments, and other groups in countries they operate in.
In the case of Guyana, Mr. Gallegos said a number of companies have been “knocking on their doors” asking how they should manage these risks. “They are very concerned about what kind of framework they are going to be facing, as far as the legal framework for the energy industry.”
The Analyst said so far these companies are not so worried about political stability and whether or not Guyana’s President, David Granger, would “still be in office by the end of his term.”
“But they are concerned that the government would take the right steps to adopt sustainable policies over time and not end up ruining the oil sector…and certainly a fragile small society with a huge influx of cash that is likely to come in the next few years,” Mr. Gallegos pointed out.
He said building an oil industry from scratch, as is the case in Guyana, is a “huge challenge” and it is important that lessons are taken from countries that have done it before. “My understanding is that the Granger government has been reaching out to Canada and Norway and a number of players. I think that is a good thing.”
Mr. Gallegos said he hopes that the current government in Guyana adopts some of the lessons learnt from these countries since it is a challenge to manage a new industry and the amount of wealth that comes from oil production activity. “It is worse to have money mismanaged than not to have any money at all,” he stated.
He said this is a lesson for every resource-rich country, noting that some countries, such as Norway, manage it much better than others.
Multiple regulations are being drafted and proposed amendments to existing laws are being written and studied in Guyana, as the country gears up for oil production, set to get underway in 2020.
The political analyst spoke with OilNOW on the sidelines of the 26th annual La Jolla Energy Conference currently being held in San Diego, California.
