Norway-based independent energy research company Rystad Energy says the prolonged political impasse in Guyana continues to be a risk to the country’s emerging oil and gas industry and the absence of a fully functional government to approve projects and move forward with key initiatives such as auctioning new blocks could have long-term negative consequences.
“There is economic detriment to not be able to sanction projects and results in loss of revenue for the operator, but also for the host Government,” Schreiner Parker, Rystad Energy’s Vice President for Latin America and the Caribbean, told OilNOW during an interview on June 24.
He said the world is moving more quickly towards energy transition, so the question becomes how much oil is going to be left in the ground. With regards to Guyana, Parker said if companies are not able to sanction projects then move to development, the big question would be – what is the point in even pursuing exploration? “Exploration in itself is worthless unless you are able to either 1. sell that discovery to someone else or 2. explore that discovery and monetize what you find. So, there is that issue and if there is no kind of functioning government that can sanction these projects, that is definitely a risk.”
Parker said as Liza Phase 1 continues to produce oil, even if there are project approvals for other developments, those revenues may not be accessible to a government deemed to be illegal.
“Generally it’s a pretty tough look and I think the biggest risk of having a government that doesn’t have any kind of legal ability to do international businesses, is the fact that you are not going to be able to open up more acreage to other players,” he said. “So that, really from a long-term perspective, is the thing that could be the biggest detriment to Guyana because there is a window of time in the next several years where you are going to have people that are still very interested to come to Guyana and participate in what’s going on there.”
Parkers’ comments come just two weeks after the completion of a 33-day recount of all votes cast in the March 2 General and Regional Elections which was expected to bring an end to the impasse by way of declaring a winner. However, while the recount results showed a win for the opposition People’s Progressive Party Civic by just over 15,000 votes, the incumbent A Partnership for National Unity + Alliance For Change (APNU+AFC) coalition claims fraud was committed during the voting process and as such, the recount results cannot be credible.
The APNU+AFC had initially claimed victory back in March, saying that the election was free and fair. At the time, a Returning Officer was accused of inflating votes in the party’s favour and this was objected to, leading to the recount. The Chief Elections Officer has since come up with alternate results based on what he says are ‘valid’ votes, showing a slim victory once again for the APNU+AFC.
This move is being strongly objected to by a growing number of local, regional, and international groups, observers, and stakeholders. They, along with the Commonwealth and ABCE foreign powers have said a declaration of the winner should be made based on the recount results which regional group CARICOM has said is legitimate.
Delays in a final declaration continued last week due to court challenges and this has since found its way to the Caribbean Court of Justice (CCJ), Guyana’s highest court, which will hear the matter on Wednesday.