Staatsolie’s Managing Director, Annand Jagesar, says Suriname must act carefully to avoid the economic risks that come with oil wealth.
“You can only mitigate the resource curse. You cannot completely eradicate it,” Jagesar warned during a side interview at the Suriname Energy, Oil & Gas Summit in June.
He pointed to Guyana as a cautionary example. “Housing in Guyana is a big problem right now,” he said. “Food and beverages are [also] becoming more expensive.” He explained the principle of supply and demand. “If 50 people are looking for 10 available houses, the prices will increase. And then the local Guyanese people, they have an issue with finding affordable housing.”
Despite Jagesar’s caution, it should be noted that Guyana, an oil producer for a little over seven years, has had no major indicators of the Dutch Disease. While Guyana faces real risks, the evidence shows it has not fallen into the trap of the resource curse.
Read more here: Is Guyana facing the Dutch Disease? The reality behind the oil boom
Jagesar stressed that it is the government’s job to develop “diligent policies” to limit the negative effects of rapid economic change. He said Staatsolie’s responsibility is to ensure the success of the projects it participates in.
Staatsolie recently concluded a US$2.1 billion financing deal for its 20% stake in the offshore Block 58 development. “This is big, but it’s very important for Suriname,” he said. “We can participate in the project itself, not supervise from a distance.”
He said this level of involvement will allow Suriname to learn and eventually lead its own developments. He also said Staatsolie is helping prepare businesses. “We are helping companies to be able to participate in bidding rounds… They have to fill out an anti-bribery form. They have to have accounting reports to evidence that the money was cleanly earned.”
Jagesar believes that through these actions, Suriname can share the benefits of oil while guarding against its downsides.
