Norway’s success as an oil producer has been based largely on the country’s push to diversify the economy and not use oil revenues to underpin all other industries in the country. This approach, if taken by Guyana, will see the South American country benefiting meaningfully from its newfound oil wealth as it gears up for first oil, now just weeks away.
Speaking at a press update on Day 1 of the Guyana International Petroleum Exhibition and Summit (GIPEX) last week, Schreiner Parker, Rystad Energy’s Vice President for Latin America and the Caribbean said sharing the Norwegian experience with Guyana can help the country adopt measures which have been proven to be successful.
He alluded to the transformation of the Norwegian economy since it became an oil producer and highlighted the strides the country has been able to make in education, infrastructure and amassing a one trillion-dollar plus wealth fund – the largest in the world.
“The Sovereign Wealth Fund itself in Norway is very interesting because their mandate is to invest in everything outside of Norway and outside of the oil and gas space. So, they have a counter-cyclical balance to their investment strategy that means if oil is low that they are not exposed to that from the Sovereign Wealth Fund perspective,” he said.
Parker said being able to bring the Norwegian experience to Guyana and translate it to potential development is something Rystad Energy would be interested in pursuing. “Certainly there is a lot of responsibility that the government is going to have here to make sure that this hundred billion dollars or more that Guyana is due to receive throughout the lifetime of production, in terms of government take, is really used to the benefit of the people,” he stated.
Parker said breaking down some of the lessons learnt by Norway and applying them to Guyana can have far-reaching benefits for the South American nation.
“I think it’s about really three kind of distinct things that are all actionable, which is; creating an education fund, creating an infrastructure fund and creating a Sovereign Wealth Fund,” he said.
There are also some secondary steps which can be taken, Parker said, such as the establishment of a national oil company, but not in the sense of Petrobras or PEMEX but more in line with what the Brazilians have done with PPSA which is a company that is able to utilize the money that’s been made on the government profit oil and take non-operating positions in future blocks coming up. “So, being a financial partner rather than an operating partner,” he pointed out.
Rystad Energy is an independent energy research and business intelligence company based in Norway providing data, tools, analytics and consultancy services to clients exposed to the energy industry across the globe.
