The Country That Wasn’t Ready to Win the Lottery
Guyana just discovered it owns enough oil to solve all its problems — and cause even bigger ones.
The parliament building in Georgetown, colored a light shade of pink, is located at one end of the government district, next to the city’s Stabroek Market. One sunny afternoon in late April, the driveway out front was filled with Toyota Land Cruisers. The 65-member National Assembly was about to begin a session focused on a juvenile justice bill. It was the fifth time the legislative body had met since the start of the year.
The debates and long speeches carried into the night. At one point, Gail Teixeira, the opposition whip, castigated the government for failing to move on an agenda, accusing the party of stalling oil-related legislation. “The Petroleum Commission bill, which is so important to this country, has been sitting in committee since June 2017,” Teixeira said. “So, what’s the problem? You’re in the chair, not us.” The Petroleum Commission is intended to do everything from collect oil industry data to ensure companies comply with all relevant laws. Because of the stalled legislation, it exists right now only in theory.
The government is under pressure — and not just from the opposition. ExxonMobil is rapidly developing its first well. Both it and Total have cut deals with smaller companies that obtained offshore acreage from the government years ago. Repsol and Tullow Oil are active, too. Ralph Ramkarran, a former speaker of the National Assembly who left the People’s Progressive Party, believes the government has not “displayed the capacity and willingness to act in a concerted manner to set the stage in all respects for development of Guyana as an oil and gas producer.”
The Petroleum Commission isn’t the only agency the country still needs to get off the ground. The current administration is still mulling how to set up a sovereign wealth fund to guide how Guyana spends and invests its oil money. In the absence of a fund, there has been relatively little discussion about how the country should use the cash.
Trotman, the minister of natural resources, listened silently to Teixeira’s jab that night in parliament. An attorney by training, he is familiar with such criticism, hearing it on near-daily basis in the Guyanese press, which carries out lively coverage of battles between the ruling and opposition parties. Later, during an interview at his ministry, Trotman recounted his side with a hoarse voice. Legislation for the sovereign wealth fund should be presented before the end of the year, he said, at which time it will be better to start debating how to use and invest future oil revenues. The Petroleum Commission bill was delayed while the country waited for help from experts at the World Bank, Trotman added (the government recently announced it present a new bill in parliament in June).
“There’s no such thing as enough time,” Trotman said. “Our objective, of course, is to have as much as we can get in place before production starts, but accepting and understanding that even with production, it will take years, sometimes decades, to really be able to fully grasp and manage everything properly.”
Building up the new agencies won’t be easy, even when they are formed on paper. A 2009 United Nations report found that almost 80 percent of Guyanese who attend college seek opportunities abroad. Skilled workers equipped to take on complex oil regulation are rare and those with credentials will be tempted by jobs at lucrative oil companies. “It’s a big, huge, huge, huge problem,” Jordan, the finance minister, said in a separate interview. “And it’s magnified because of the pressures that have been put on the administration to prepare for oil and gas.”
The government is devising coping mechanisms, but they may pose problems of their own. To make up for what it called “capacity deficiencies,” Minister of State Joseph Harmon recently announced the Guyanese Environmental Protection Agency had outsourced an environmental assessment of some of ExxonMobil’s activities offshore to a U.S.-based firm. ExxonMobil’s affiliate in Guyana will cover the cost of the contract. Harmon denied the agency was “reneging on its responsibility” in having the company pay for the service, according to a government news story.
International oil companies certainly have the expertise and willingness to cooperate with Guyana. No firm has pushed harder to establish a relationship with the government than ExxonMobil, owner of biggest stake in what analysts have called “one of the most lucrative new energy discoveries in the world,” according to Barron’s. ExxonMobil declined to make anyone available for an interview. The company has been busy in the country. It has hosted ministers on its offshore drillship and at its Texas headquarters, made charitable donations and established a local business-development center. Comments from its executives in Guyana are often big news in the Georgetown media. When reporters from Foreign Policy asked to observe an oil-spill training session a government agency organized with ExxonMobil, Minister of State Harmon said he was unable to authorize it. “It’s their event,” he said.
In an email, a spokesman said the company has engaged Guyanese government agencies “to understand their priorities and objectives for industry growth, including a vision for responsible industry oversight and regulation … The Guyana development is a phased development, in part so that there is time to build the necessary capacity across the industry and government.”
But it remains an open question whether the government will have the power to challenge ExxonMobil — and other oil companies — when their interests don’t neatly overlap with the country’s own.