President of the Guyana Manufacturing and Services Association (GMSA) Shyam Nokta believes that now is the time that Guyana must make the most of the opportunities to strengthen the South American country’s traditional economic sectors given not only the finite nature of oil and gas but also the increasing environmental consciousness that its leading towards use of renewable energy.
Nokta was speaking on Wednesday at the inaugural Caribbean Oil and Gas Virtual Summit (CARIVS), a three-day event which opened on Tuesday.
“The pandemic, and current down cycle in the oil and gas industry, remind us to take advantage of windows of opportunity in a sector where there is little certainty or predictability on price and markets and to deploy revenues gained towards economic diversification,” Nokta said. “This, of course is easier said than done, as our regional experience has shown.”
He noted however that Guyana and Suriname have fairly diversified economies and are not exactly starting from scratch. “Moving in this direction clearly requires strong political will, clear strategic direction, and prudent management of resources,” he pointed out. “The new Governments in these two countries have so far shown a commitment to diversification and in the case of Guyana, efforts are already underway to put the necessary policy, legislative and institutional framework in place to ensure prudent management of the resource and revenue, greater accountability and transparency, and strong local content.”
Nokta noted further that considering Guyana’s green credentials and track record, there is “an exciting opportunity to try to reconcile green development with the oil and gas sector.”
He said that in the case of Guyana, the global impact on oil and gas prices and the resulting effect on the sector, is likely to be buoyed by improvements in minerals, in particular gold. He stated that while there continues to be potential for growth and expansion in Guyana’s traditional economic sectors, the ability to add value through manufacturing has been limited primarily by the high cost of energy.
“There is optimism that this will change, considering Guyana’s new Government’s thrust to channel revenues from oil and gas to revitalize and grow the agriculture sector, expand the forestry and extractive industry, and harness the country’s significant renewable energy potential – something which has so far been elusive,” said Nokta.
Dr. William Clavijo, a specialist in public policies, strategies, and development, from the Federal University of Rio de Janeiro, Brazil, said Guyana has a unique window of opportunity of twenty years, or even less, in which projections still point to oil as the dominant source in the global energy mix. “We will see if it will be effectively used,” he stated in a paper analysing the Guyana oil boom, opportunities, and challenges.
More than 8 billion barrels of oil recoverable resources have been found of the coast of Guyana since 2015 with two offshore developments approved so far. Oil production started last December at the Liza Phase 1 Development while Phase 2 is targeted for a 2022 start-up. A third development at the Payara-Pacora area is still awaiting government approvals and due to delays, may get underway until 2024.