Americas Market Intelligence (AMI) Analyst, Arthur Deakin, believes that South American neighbours Guyana and Suriname can avoid some of Trinidad and Tobago’s mishaps by strengthening their institutions, improving their regulatory frameworks, and developing traditional sectors such as mining and agriculture.
Twenty-one oil discoveries have been made in Guyana since 2015, 18 of which were made by ExxonMobil at the Stabroek block totaling more than 8 billion barrels of oil equivalent resources. Meanwhile in Suriname, Apache has made three discoveries to date at Block 58, estimated to contain around 1.4 billion barrels.
In an article recently published on Caribbean News Global, Deakin stated that the two countries should also focus attention on less traditional sectors such as construction, tourism, and real estate as part of the efforts to diversify their economies.
Deakin acknowledged that the message of diversification is one that the Guyana government has already embraced based on the statements of President of Guyana, Dr. Mohamed Irfaan Ali. However, he said the energy framework around both Suriname and Guyana also needs to be improved to attract additional capital investment and transparently manage the coming billions of dollars in oil revenue.
Deakin is also an Analyst at Africa Market Intelligence (AfMI) where he conducts political, economic, and other risk analysis activities for the mining, energy and infrastructure sectors.
Citing the Inter-American Development Bank’s (IDB) recent advice for the creation of a strong, independent regulatory agency for Guyana’s oil sector to ensure that the windfall is not squandered, Deakin noted that the country’s broader legal framework for the sector is also underdeveloped. “… it lacks a local content law, stronger environmental management policies and simple disclosure and accountability requirements. Although the government is working on some of these issues, they need to act with urgency to maximize the benefits from the sector,” he said.
Guyana’s Ministry of Natural Resources has said the recently established Local Content Panel has been tasked with undertaking a review of all existing initiatives and policies relating to local content in the petroleum sector with a view to providing guidance for the development of a Local Content Policy and Legislation. “Further, the Panel has been meeting regularly and with support from the Ministry, will be reaching out during the month of October to key stakeholders in Government, Private Sector and Civil society to solicit inputs and perspectives,” the Ministry recently stated.
Deakin added that simply calling for the renegotiation of the Production Sharing Agreement with ExxonMobil without addressing the fundamental structural flaws in the sector, is counter-productive to the long-term growth of Guyanese society.
He said that by comparison, Suriname’s regulatory framework is less robust, and it faces the looming presence of 100 percent state-owned oil firm Staatsolie. “For Suriname to have a successful oil sector, they need to partially privatize Staatsolie or carry out structural reforms within the company. By doing so, they will allow for a more transparent, competitive, and productive oil sector…” he stated.
The analyst said that despite clear differences between the countries’ energy sectors, there will likely only be one true ‘champion’ among the three jurisdictions – Trinidad and Tobago, Suriname, and Guyana. “This will be the country that is able to create a balanced regulatory environment that is beneficial to its people, but that also strongly incentivizes foreign companies and investors to devote their resources to develop the country. Only then, will a champion be crowned.”