OIL: Guyana Is About to Open Up Pandora’s Barrel – Bloomberg

Guyana Is About to Open Up Pandora’s Barrel

Expats hold the key to whether its big offshore oil deposits bring riches — or ruin.
Wedged between Brazil and Venezuela, Guyana could easily go unnoticed. It has fewer than 750,000 people and a per capita income of $4,300, half the regional average, qualifying it as the hemisphere’s third-poorest nation.
 At the moment, Guyana also might be its luckiest. Having struck big oil offshore starting in 2015, industry experts reckon total reserves at around 2 billion barrels. That bounty could make Guyana immeasurably rich and Latin America’s biggest producer in less than a decade – or just another Trump-hole.  
History abounds with tales of raw-material bonanzas turned into, at best, a mixed blessing for poor countries. Dutch diseasecorruption (think Venezuela and Nigeria), life support for dictators: The gift of oil comes with many afflictions. A classic International Monetary Fund study found that living conditions in oil-rich nations in sub-Saharan Africa were no better or worse than countries without oil.

“Equatorial Guinea comes to mind,” Rice University energy scholar Francisco Monaldi told me, in reference to the Central African dictatorshipwhich, after striking oil in the 1990s, went in a matter of years from desperately poor to desperately rich.

“We know historically that if you’re poorly managed when you received the windfall, you’ll likely have difficulty capitalizing your bounty for development,” said Monaldi.

The example is not lost on Guyana, which has a vibrant if flawed — “partially free,” according to Freedom House — democracy, but frail institutions and admittedly scarce human capital to manage the coming wealth. “Guyana has almost zero capacity now for dealing with oil and gas,” Jan Mangal, petroleum adviser to President David Granger, said recently at the University of Guyana.

While officials in Georgetown quickly disavowed Mangal, his comments were hard to ignore. With major oil set to flow as soon as 2020, authorities are bracing both for the shock of wealth and its attendant woes. The bounty will not come all at once: Exxon and other producers will use most of the early oil to pay down startup costs. But that will only delay the impact. “It’s like drinking from a fire hose right now,” Vincent Adams, a Guyanese engineer who recently retired from the U.S. Department of Energy, told me.

One of the biggest challenges is who will manage the gusher. Guyana is a nation of emigrants. Some 463,000 Guyanese, or 60 percent of its population, live abroad, and the outflow continues apace. What’s worse, the leavers have included roughly nine of every 10 graduates with higher education — energy experts and oil engineers among them — according to the World Bank. “The cream of the crop migrated,” said Adams. “In terms of local capacity, we are at a serious disadvantage.”

Guyana could attenuate the brain drain by reaching out to its diaspora. There are more than 100 reported expatriate organizations, and as a group overseas Guyanese consistently send more money back home than foreign investors plow into the economy every year, according to a recent study by Hisakhana Pahoona Corbin and Luis Eduardo Aragon of the Center for Advanced Amazonian Studies. “We have a repository of knowledge outside of Guyana which is amazing,” said Adams.

The government belatedly began to tap this talent pool, launching an official Guyana Diaspora Project in late 2012, but the effort has been criticized as timid. “In spite of this potential, few institutional arrangements have been put in place to better engage the diaspora or to unlock their potentials as an alternative for accelerating development,” Corbin and Aragon wrote last year.

Big Oil also knows the stakes. Despite the familiar criticisms — “Dem know wha Exxon do to govt all over de world,” one marquee local columnist warned in a mock patois — drillers have every reason to make sure their investment is safe.

The hardest part will be down to the host country, of course. “Until recently, small countries like ours were sheltered by benefactors in the east or west. Now the Berlin Wall is gone and the protectors have become our competitors, and we’re left to deal with the world markets,” said Adams.

That’s the challenge the country’s emigrants faced when they remade their careers abroad. Now Guyana must reach out to its diaspora ringers and bring that lesson home.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

To contact the author of this story:
Mac Margolis at mmargolis14@bloomberg.net

To contact the editor responsible for this story:
James Gibney at jgibney5@bloomberg.net

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Comments

  • Mark  On March 17, 2018 at 10:00 pm

    We will only have to wait until 2025 to 2030 to see if the oil industry has improved the lives of Guyanese, or enriched foreigners from the white countries.

    • Ali...  On March 18, 2018 at 1:36 pm

      “white countries “

      Dude, enough of your ‘white’ racist jabs. You claim to be educated but your racist rants belong to the uneducated gang. Sure you can vent but without being so hateful to one particular group of people. My two cents worth.

      • Mark  On March 19, 2018 at 12:34 am

        How was America formed, who currently is Head of State of Canada? I don’t know why you defend the people who have enslaved and exploited us. No wonder many Guyanese of African descent have contempt for certain Guyanese of Indian descent. No wonder the Africans in Suriname and French Guiana refuse to acknowledge certain ethnicity in their country as having a status.

      • Mark  On March 19, 2018 at 12:35 am

        Who was responsible for stealing my ancestors from Cote d’Ivoire (Ivory Coast), West Africa to force them to work in sugar plantations in Berbice?
        Moderators, I challenge and dispute the idea that I am promulgating “hate”. My ancestors did not murder millions of Native Indians or enslaved millions of Africans from West Africa.

      • Mark  On March 19, 2018 at 12:44 am

        African-Americans and non-whites were not considered human beings in America until the Civil Rights Act of 1963 was passed into law. Blacks in South Africa were not considered human beings in South Africa until Nelson Mandela fought a battle to abolish apartheid in 1992.
        Trump and his supporters view brown people as the worst stereotypes and descriptions that you can imagine, that wearing a turban as a Sikh or Hindu can get one put on a list for secondary searches.
        Even in a “tolerant” country like Canada, NDP leader Jagmeet Singh is viewed with contempt by local Canadians because of his brown skin and turban.

  • Linda  On March 18, 2018 at 11:01 am

    STUPPPSSSS!!!!

  • Linda  On March 19, 2018 at 7:21 pm

    If Jagmeet was viewed with contempt he would not have been elected Leader of the NDP. You know you really talk a xxxxx xxxxx. [Moderator… try not to be personal]
    Get your head straight before the thoughts come pouring out….is the NDP made up of non-whites? Why are you living in Canada? You still haven;t answered that question. If you dislike white people so much and you claim that they’re running the show, then pack up you and your family and hit the road to a country that only have brown people. You’re full of venom and if you keep that up you’ll end up in an early grave.

    • Mark  On March 20, 2018 at 8:21 am

      Online trolling trying to provoke an online “flame war” on critics of Exxon Mobil.

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