Guyana awaits oil dollars – By Bert Wilkinson

GUYANA AWAITS OIL DOLLARS

By Bert Wilkinson – Caribbean Life – August 19, 2016

Exxon-Mobil- Deep Water Champion Oil Exploration Rig

Exxon-Mobil- Deep Water Champion Oil Exploration Rig

Last week, Guyana’s main opposition party accused government of doing very little to get key infrastructural projects going and spur employment, suggesting that the administration is hedging all its bets on the massive oil and gas find off the coast.

This is despite the fact that U.S.-owned Exxon Mobil which first declared that it had found a humongous oil well at a location 150 miles offshore, will not likely pump the first barrel of oil before 2020.

As the days went by government has not done very much by way of answering the opposition charges but a chat with anyone connected with the country’s newest cash cow sector will realize there are frenetic preparations in the run up to 2020.  

“We are sending or have sent a number of our staff for training in a number of areas, from petroleum law, to petroleum engineering among other areas and will soon have to separate the oil unit from the geology and mines commission as they would need to be apart,” said agency Director Newell Dennison.

Laws dealing mostly with regulating exploration rather than production companies are to be overhauled and local universities are being reoriented to deal more with engineering disciplines such as geology and mining.

After weeks of drilling off the western Essequibo coast, Exxon in May of last year reported a massive find at its Liza 1 well, suggesting that it might singly contain up to 1.4 billion barrels of oil and a yet to be determined amount of gas.

The firm has since successfully drilled a second well, “Skip Jack,” a third is in progress and a fourth is on cards before yearend.

“In the early stages we are going to be rolling in the hundreds of millions. Later as it progresses, it will be in the billions,” said Natural Resources Minister Raphael Trotman.

The oil and gas find has come at a time when Guyana remains one of the few countries in the 15-nation Caribbean Community group of nations, which is still growing economically and which appears to have a bright future with its abundant mineral wealth outside of the lifeline tourism and hospitality sector of its regional neighbors.

Both Dennison and Trotman talk about being bombarded each and every working day for meetings with cash flushed international oil and gas companies, others in the supply support industry and professionals willing to offer their expertise to a country, which knows nothing about oil and gas.

Junior exploration company, CGX Energy of Canada, for example, appears to have made the smartest move by hiring and teaming up with Exxon to drill its own well at a concession nearby the Exxon oil field.

“We are about halfway through drilling. We should know what is going on in another three weeks,” said CGX’s Kamal Dookie.

Spanish-owned Repsol is also getting ready to begin exploration work even as Exxon, happy with what it has found so far, has asked authorities to grant it more acreage to widen its search area.

Trotman says that Exxon will be allowed in the first three to four years to recoup its billion dollar investment through the sale of its production but it has “agreed to pay royalties on it,” allowing Guyana to cash in what he terms “hundreds of millions of dollars at this stage” and billions very shortly after.

Officials are already talking about massive infrastructural projects, including construction of a paved six-lane, 350-mile highway through the jungle and mountain regions to northern Brazilian border, opening up new markets, the interior and cooperating with Brazil to access markets for its landlocked northern territories to the wider region and Central America.

Even the military is getting in on the action. Just this week, the force sent officers and ranks to a support ship near the drilling rig to train for oil spill emergencies while the private sector is openly discussing ways of cashing in on related investment opportunities.

As all this is going on, prices for gold, currently the main foreign exchange earner, are slowly creeping up bringing joy to miners after a few years of panic. Guyana also can still rely on rice, sugar, bauxite, timber, the fishing and agriculture sectors and a host of others. Now it also has oil and gas and its future appears secure.

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