The discovery of oil has revived Venezuela's claims to the so-called Guayana Esequiba,
the territory west of the Essequibo River. This is no less than two thirds of present-day Guyana.
It is not surprising that Guyana has offered good conditions to both the US
giant ExxonMobil and the Chinese State corporation in order to get them on its
side in this conflict. So everything indicates that Guyana will be able
to enjoy unprecedented wealth thanks to the oil discovered by this consortium.
Now the question is, how will they use this enormous wealth? How much potential money are
we talking about exactly? Well, let's take a look.
(GIANT) It seems, VisualPolitik viewers,
that the oil reserves discovered are so large that they promise to provide Guyana
with – hold on to your chair – approximately $160 billion over the next 20 years. Check it out.
It will undoubtedly be a massive change for a country where more than 40% of its
800,000 inhabitants live in abject poverty on less than $5.50 a day.
And we are not talking about a distant dream. In 2022 alone,
government revenues from hydrocarbon exploitation will exceed US$1 billion. That is about US$1,250
per capita. Almost 90% of the government's ordinary income in the preceding years.
Guyana will now be able to realize its goals and become a modern and prosperous
country. For example, one of the dreams is to take advantage of its rivers to build a hydroelectric
power plant that will provide the nation with clean and stable energy. The ideal location has
been identified since 1976 and since 1997, the Government of Guyana has had plans to build it.
However, throughout all the intervening years there was one thing missing:
the $840 million it will cost to build the Amaila Falls project or someone interested in putting up
all the dough in exchange for its exploitation. But now, in theory at least, that problem is about
to disappear: Guyana will be able to finance it and, in addition, its newly buoyant and growing
economy will create demand for the energy that would make the operation profitable.
Curiously, however, the Chinese company that was awarded the project has just pulled out.
This will delay commissioning beyond 2027. It is quite a setback for Guyana,
but President Ali maintains that they are not giving up on the project. Take a look:
(VIDEO2: The independent review by Norway has pointed to this project as being good for Guyana,
being good for the environment and bringing greater prosperity.
So this project will get under way) It is precisely because of all the
reasons that Ali has just pointed out that what is puzzling is that this project is not going to
be undertaken immediately, even if it is through the State electricity company. But I suppose it
will be a matter of budgetary prudence. If that is the reasoning... Then it is not so bad.
In any case, a 227-kilometer gas pipeline to the coast and a natural gas combined cycle plant
in the vicinity of Georgetown are already under construction. ExxonMobil itself will be in charge
of this, which will subtract the cost from the profits accruing to Guyana. However, what there is
also money for, as always when the Indo-Guyanese govern, is the same as always, a real black hole.
Since coming to power in August 2020, Irfaan Ali's government has made several capital
injections into the state-owned GuySuCo sugar company, which is having trouble even paying
salaries. It is even working to reopen loss-making plants simply because they are
employment niches for Indo-Guyanese. In the last two years alone, public aid granted to
GuySuCo has amounted to approximately 30 billion Guyanese dollars, or about $140 million dollars.
Of course, with all the flood of money expected, these seem like nothing more than crumbs.
In any case Guyana is going to change a lot over the next few years:
roads, ports, schools, hospitals..... Guyana has become the fastest growing
economy in the world. We are talking about 44% in 2020 and 20% in 2021. By 2022 the government
expects 48% growth. And even if we take oil out of the equation, growth almost reaches 8%. Things are
going better than ever... At all levels. N4 (Govt partners with Mount Sinai,
Hess Corp to transform Guyana's healthcare) Hess Corporation, one of Guyana's three oil
companies, is a major donor to New York's Mount Sinai Hospital, one of the most prestigious in
the world, and has been influential in getting the organization involved
in modernizing Guyana's healthcare system. Other positive news coming from the consortium
is the driving effect that its activity has on Guyana's industry. It is true that it
could be greater, because there are areas that local companies are currently unable to reach,
as the country has so far lacked heavy industry. But there is something. Take a look.
N5(Guyanese suppliers profit from ExxonMobil's US$540M expenditure)
So $540 million may not seem much considering ExxonMobil's total spending on this project.
But it is not bad relative to Guyana's GDP in 2021, which was $6.5 billion. What’s more,
ExxonMobil's success in Guyana leaves the country in a better position to negotiate more beneficial
terms with future investors because no one doubts the potential of Guyana's oilfields anymore.
However, the country's ability to attract investment will depend on its ability to
offer legal certainty. And that requires political stability. If they succeed, Guyana could become
something like the Monaco of Latin America. But now the question is over to you: What future
do you foresee for Guyana? What do you think it should do with the oil money? You can leave me
your answer in the comments. As always, if you found the video interesting, please like it and
don't forget to subscribe to VisualPolitik. All the best and see you next time.