The Presidents of two star oil producers in South America – Brazil and Guyana – met in Georgetown on Friday to discuss how they may strengthen relations. Energy, being a going concern for both countries, was high on the agenda.
Presidents Jair Bolsonaro and Dr. Mohamed Irfaan Ali decided that it is necessary to make strides on the energy corridor they have been discussing with their neighbours for years.
“The two Presidents ratified the importance of collaboration in the field of electrical interconnection between Brazil, Guyana, French Guiana and Suriname,” a memo on the meeting revealed.
It said they encouraged the Inter-American Development Bank (IDB) to proceed with a new phase of technical, economic and environmental feasibility studies, in-keeping with a Memorandum of Understanding the Bank signed with energy companies from the proposed participant countries back in 2019. A MoU was also signed, to press on with the project, when leaders of Brazil, Guyana and Suriname met up in Paramaribo in January.
The IDB calls it the ‘Arco Norte Electrical Interconnection’.
The Bank conducted baseline and pre-feasibility studies in 2016 and 2017, and a report it produced said the main benefits of such a project would be lower-cost generation for all countries involved; potentially lowered electricity prices for consumers in Guyana and Suriname; more secure supply; reduced carbon dioxide emissions and export earnings.
The Guyana government is already gearing up to tap into those benefits on its own with a major gas extraction project, in partnership with ExxonMobil. The gas will be piped from the Liza field, following likely project commissioning in 2025, and will be used for domestic power generation, and to meet local demand for certain natural gas byproducts.
But having had many more discoveries offshore Guyana since 2015, there is about 16 trillion cubic feet of proven gas reserves, revealed Vice President Dr. Bharrat Jagdeo during a recent press conference. There may be a lot more that can be done with the gas than just meeting local demand.
Following in Guyana’s footsteps is Suriname, which also has considerable natural gas reserves, judging from recent discoveries.
These two countries’ recent offshore finds may have catalysed political will on the topic. But while natural gas is gearing up to be a major component, discourse over the years envisioned an energy mix that was diverse, including hydropower. On that note, Brazil and Guyana also intend to cooperate to explore their hydropower potential.
Each country has its own approach to the energy transition, which will inform the significance of its role in this corridor. Notably, while the corridor would go a long way in ensuring energy security in the region, it would require considerable investment.
