If the Guyana government were to impose a cap on the expansion of Guyana’s oil and gas operations by, say, not approving any more projects, it would essentially be killing the momentum in the local supply industry. According to Vice President Dr. Bharrat Jagdeo, this is not something it wants.
He explained during a recent press engagement that government is keen on securing maximum growth by doing just the opposite.
The VP was at the time responding to a question about maximising revenues for Guyana by ringfencing Stabroek Block projects. Ringfencing is not a feature of the contract governing the acreage.
“If we start ringfencing now,” Dr. Jagdeo said, “we will run afoul. We would have to have an amendment for ringfencing.”
The Vice President said the same objective can be achieved by not approving any new projects, but this would effectively kill the investment pipeline for the future. “Is that the best decision for the country? I do not believe that…,” he pointed out. “If we do that at this stage, then you not only cap the growth of oil and gas production, which in the long run can be more lucrative for the country, but you will also kill the momentum in the local industry that will service the oil and gas sector.”
He said this will effectively kill the project pipeline by not moving forward. “We have said from the other projects – local content, gas-to-energy – this is where we are getting value for Guyana.”
Since assuming office, the President Irfaan Ali-led administration has adopted a pathway of development that sees oil revenues being used to address Guyana’s immediate needs. These include world-class healthcare and education services, state-of-the-art infrastructure, climate-resilient agriculture practices/systems, and a vibrant, expanding eco-tourism industry – just to mention a few.
Now that Guyana has carved out benefits for Guyanese and Guyanese-owned businesses in the country by way of the Local Content Act (2021), the government projects that the spin-off benefits could amount to US$700 million annually.
On the side of gas-to-energy – a major transformational project for Guyana – it is estimated that this project will save GY$27 billion annually for households. As for fuel imports, the state electricity provider, Guyana Power and Light (GPL), will be saving US$11 million in foreign currency.
“It is not just revenue for the state,” Dr. Jagdeo said, of these projects. “It is value for the country.”