COVID-19, political instability could restrict Guyana’s growth and stall oil investments

Must Read

US$3.6 billion part of commitment expected for Payara development this year, approval expected soon – Rystad Energy

Global oil and gas project sanctioning is set to recover and exceed pre-Covid-19 levels from 2022, with...

First Guyanese security firm attains ISO certification, looking to tap into O&G opportunities

Through the assistance of the Center for Local Business Development (CLBD), another Guyanese firm - MMC Security...

Suriname oil discoveries estimated at 1.4 billion barrels – Rystad Energy

Norway-based independent energy research and business intelligence company, Rystad Energy, says the three discoveries made offshore Suriname...
OilNOW
OilNow is an online-based Information and Resource Centre which serves to complement the work of all stakeholders in the oil and gas sector in Guyana.

The International Monetary Fund (IMF) says commodity exporters in South America will face all round lower export revenues as a result of the COVID-19 pandemic both from the drop in prices and reduction in export volumes, especially to China, Europe and the United States which are important trade partners.

“The sharp decline in oil prices will hit the oil exporters especially,” the IMF said.

The tightening of financial conditions will negatively affect the large and financially integrated economies and those with underlying vulnerabilities.

The monetary body said containment measures in several countries will reduce economic activity in service and manufacturing sectors for at least the next quarter, with a rebound once the epidemic is contained.

South America’s newest oil producer Guyana is listed by the IMF as one of the least prepared countries in the western hemisphere to combat the spread of the virus.

Mauricio Cárdenas, visiting senior research scholar at the Center on Global Energy Policy at Columbia University said while COVID-19 will have a serious detrimental impact on the economies of Latin America and the Caribbean, the oil price war is a second economic blow for the region.

“Relative to the prevailing outlook in late January, Latin America will face a year of lower economic growth and much weaker public finances, leading to potential downgrades in sovereign ratings,” he said.

Cárdenas said it is worth noting that many countries in the region were already under stress before the COVID-19 pandemic.

Chile and Colombia have been hit by social protests over economic inequality and a lack of social mobility; Venezuela is in the midst of the worst humanitarian crisis the region has ever seen.

Guyana is now racked by political instability after the March 2 presidential election was clouded by allegations of fraud surrounding the tabulation of votes for the largest district. This has prompted the United States to warn of potential sanctions if a government is put in place in the absence of a transparent process. Several observer groups that were in the country for the pivotal election, including the Carter Centre, have said any government put in place under the current circumstances would lack legitimacy.

Guyana future uncertain as election woes deepen and coronavirus devastates global economy

“Low prices and political instability will probably delay investment plans by oil companies operating in the country, resulting in lower GDP growth relative to the expected figure of 85 percent, which would have made this very small country the fastest growing in the world this year,” Cárdenas pointed out.

With vast oil resources exceeding 8 billion barrels discovered off the country’s coast since 2015, Guyana, with a population of just over 750,000, has an unprecedented opportunity to fast-track its development. It remains to be seen if the country’s politics and the racial division it fosters, will continue to stymie its growth and curtail opportunities for its multi-racial society.

RELATED:

US, UK and Canada call on Guyana President to avoid transition of government amid alleged electoral fraud

CARICOM team exits Guyana as election crisis deepens

- Advertisement -

Latest News

US$3.6 billion part of commitment expected for Payara development this year, approval expected soon – Rystad Energy

Global oil and gas project sanctioning is set to recover and exceed pre-Covid-19 levels from 2022, with...

Suriname oil discoveries estimated at 1.4 billion barrels – Rystad Energy

Norway-based independent energy research and business intelligence company, Rystad Energy, says the three discoveries made offshore Suriname to date are estimated to...

First Guyanese security firm attains ISO certification, looking to tap into O&G opportunities

Through the assistance of the Center for Local Business Development (CLBD), another Guyanese firm - MMC Security Force Company - has been...

Guyana’s history with oil dates back centuries

The possibility of Guyana having petroleum stemmed from observations of petroliferous occurrences recorded by Dutch explorers since the 1750s, but it was not until...

Liza 1 & 2 ‘will provide low cost energy for years to come’ – Hess CEO

Even as governments and international oil companies pursue efforts to reduce carbon emissions on a global scale in the move towards renewable...

More Articles Like This