With Guyana on track to be the second or third largest oil producer in the Western Hemisphere, US Ambassador Sarah-Ann Lynch says the country has to advance from being a raw material so as to avoid the dreaded resource curse and she also stressed that contracts have to be honoured and that the government is accountable to all of the people.
Lynch’s reference to honouring contracts will likely be seen as encompassing ExxonMobil’s highly controversial 2016 Production Sharing Agreement.
She cited the need for regulatory reform, bolstering the energy grid and diversification in the energy sector while lamenting that the cost of energy here is one of the biggest obstacles to investment.
Lynch also adverted to the series of major infrastructural projects planned by the government including the new bridge over the Demerara River which she suggested would cost around US$150m. The government has not provided an estimate of the cost of the bridge.
She said that it will be crucial for the government, its international partners, the private sector and civil society to “get it right”
The text of the Ambassador’s remarks follows:
Ambassador Sarah-Ann Lynch
Guyana Oil & Gas Summit (Virtual)
December 2, 2020
It is my distinct honor to speak to you today, on behalf of the U.S. Embassy, at the Guyana Oil & Gas Summit. I thank the Georgetown Chamber of Commerce and Industry for its partnership in this event. To all participants, including Ministers, members of the private sector, Chambers of Commerce, other diplomatic missions, ladies and gentlemen, welcome. This summit is an important event given the role of oil and gas in the future of Guyana, and indeed the future for the region. As the U.S. Ambassador to Guyana, my goal today is to share with you the U.S. viewpoint on the opportunities that exist in Guyana’s energy sector, and to highlight the opportunities for collaboration between Guyanese and U.S. companies that is already happening. The ties between our two countries are strong, and it is my job, and the job of the Embassy, to work hard to reinforce those ties for the mutual benefit of both countries and for the region.
I don’t have to delve too deeply into how much opportunity there is in Guyana. The IMF projects Guyana’s economy will grow by 26.2% in 2020. In 2019 the country’s GDP was $4.2 billion and by the end of the year it is projected to grow to $5.3 billion, making it the fastest growing economy in the world.
And what does that mean? That means that Guyana is open for business. Obviously, the biggest draw is in the oil and gas sector, particularly in exploration and services. But there are also significant opportunities in the renewable energy, financial, construction, and agricultural sectors. Guyana and the private sector must capitalize on this. If Guyana can advance from being a raw material producer to exporting more value-added goods, it will capitalize on a needed diversification of its economy. This will enable it to avoid the dreaded “resource curse” that has plagued many developing countries with newly discovered natural resources.
And the United States is here to help. As part of Secretary of State Mike Pompeo’s historic September 17 visit to Guyana, Guyana signed onto the Growth in the Americas initiative. This agreement provides a framework to promote private sector investment in finance and procurement, infrastructure, and energy security. It will also lay the groundwork to implement global best practices in policy, legal, regulatory and investment frameworks. As part of this bilateral collaboration we plan to establish a Working Group with the Government of Guyana to develop the foundation for partnership in these key areas. Less than one month after the Secretary’s visit, a six-agency delegation led by the International Development Finance Corporation, or DFC, came to Guyana further highlighting the U.S. Government’s support of economic growth and security cooperation in the region. This visit further illustrated our commitment. U.S. government officials met not only with Guyanese leaders but also the private sector, and outlined opportunities for U.S. government project financing through public private partnerships.
But this commitment is not new. The United States has a long history of working with Guyana to develop enabling environments for responsible development of energy resources. From 2010-2018, the Department of State’s Energy Governance and Capacity Initiative, or EGCI, supported Guyana’s government in its efforts to manage its upstream oil and gas sector effectively and responsibly. Even a decade ago, the Department of State recognized the need for the necessary regulatory, legal, and policy structures to ensure sound governance and sustainability in this sector. With EGCI assistance, we provided Guyana with international best practices in how to organize its energy sector and manage its revenues. With U.S. assistance Guyana was also able to initiate the process to join the Extractive Industries Transparency Initiative, EITI, to ensure the public knows where oil revenues are going.
With a new government in place, Guyana knows that it will have to move quickly in order to show both its citizens and the world that it is ready for the immense transition underway. It will have to make significant outlays in its power generation sector in order to attract the types of investment that will make it a sought-after destination in the Caribbean. One of the biggest obstacles is the cost of energy. Guyana’s energy generation is largely fossil fuel-based, with power plants utilizing heavy fuel oil. The cost of electricity is USD 0.32 per KWH, which is significantly higher than Guyana’s South American neighbors but about average for the Caribbean. Guyana also knows it will have to improve its power grid, which, unfortunately suffers from systemic losses. This is a major roadblock for the development of large industries now. If Guyana can take advantage of the natural gas that emits from the oil wells, it can bring down the cost of energy two-fold, which will make a difference in the lives of every Guyanese citizen.
Guyana is also working on reforming its financial sector to attract investment. The Minister of Legal Affairs committed to amend existing legislation to allow for the development and diversification of the existing financial sector. Guyana’s currency is stable and local banks are highly profitable and continue to grow. International companies will look for this stability and reform as they evaluate Guyana as a place to set up operations.
In addition to regulatory reform and improving the energy grid, diversification in the energy sector will help Guyana fulfill its dream of a green economy. The Ali administration committed to create an additional 400 MW of power generation within the next 5 years. The Minister of Public Works highlighted solar energy parks and micro-grids as a part of the Government’s plan for hinterland community development. The Guyana Energy Agency just signed a deal for two solar farms in Lethem and Bartica which will provide much needed energy for those areas.
These are all sweeping changes and it will be crucial for the government, in concert with international partners, the private sector, and civil society to get it right. The United States is committed to Guyana’s prosperity for all Guyanese, and our stance with regard to Guyana’s political stability over this past year should not leave any doubt that we take our values – fairness, transparency, accountability, and the rule of law – seriously. When you attract investment from U.S. partners, you get quality, you get sector specific experience, and you get a transparent deal. As Guyana moves forward on this oil and gas path, the perception that it holds these values in high regard makes a difference to U.S. investors and the international community. It is important that contracts are honored, laws are followed, reforms are real, and that the government is accountable to its people – all of its people.
The need for modern legislation and regulations that reflect those values is paramount to continue along the road toward prosperity for all Guyanese. The Guyanese I’ve spoken with, from all walks of life and all demographics, want a peaceful and prosperous country for their children to grow up in. They want a secure and stable region. And who doesn’t want those things? They are what everyone deserves, regardless of race, religion, sexual orientation, ethnicity, gender, or disability, it doesn’t matter. These are things that Guyanese citizens deserve, and that is what the United States stands for in our partnership with all of you.
Comments
Double digit story hotel and truckloads of Guyanese scrap metal to Belgium don’t benefit the common man.
Singapore, Korea and Japan don’t got a drop of oil yet they are more advanced than the Western world.
USA is in no position to advise anyone
on the ethics of fairness or honesty in its society with their dog eat dog dogma mantra
ideology…capitalistic dog in manger attitude.
I want it all ! Surely a caring and sharing attitude is way forward for guyanese.
Let’s hope Guyana’s petro wealth is used
wisely building schools hospitals and its infrastructure for its future generations benefit
Not squandered by oil oligarchs on “white elephant” projects or money launderers
of the guns and drugs brigade. Not to mention
endemic corruption in its society !
It will strong leadership with honesty and integrity if Guyana is to move forward.
Only time will tell !
Good luck to Guyana and it’s future generations.
Go guyanese go
Kamtan uk-ex-EU
The top 5% of business owners benefit from the oil industry. Even the critics own real estate and are part of the clique (controlled opposition), especially a newspaper owner who has a beef with Bharrat Jagdeo (probably turf-like wars). The rich benefit.
Sarah Lynch should refrain from admonishing and advising Guyana on anything. The USA has set no examples for any developing country to follow. She has the nerve to say the things she does.
She wants the Guyanese government to rush into deals which benefit the agendas Trump, Pompeo and whoever are their cronies in the Guyana government.
America will have a new government in place very soon. She is not to be trusted , she is a racist and a bigot and does not have the prosperity of the Guyanese people at heart. She is trying her best to do all she can to suit her own agenda before the American government changes.
What makes you think Ambassador Lynch is a racist? Has she been making racist remarks? As far as I know she is a carrier diplomat and not a political Trump appointee to the position of a US representative in Guyana. If I am wrong, please correct me.
Here is a link to Sarah-Ann Lynch biography on Wikipedia:
https://en.wikipedia.org/wiki/Sarah-Ann_Lynch
Hardly a racist biography. She has been a peach corp volunteer in Marocco and has risen through the ranks of the US foreign service.
Sarah lynch may not be a racist but she is an employee of the USA and have to observe the protocols of her position as ambassador.
Diplomatic immunity does not exempt her from
criticism or any other isms.
Everyone is entitled to an opinion and if we disagree we are free to express of disagreement if possible with reasons why. However she also has an opinion which she is allowed to express
on any forum she chooses.
Open mindedness and respect for others regardless of their political affiliations is way forward.
The pen (keyboard) is mightier than sword !
Write on……
K
Well said, Kamtan. I support your statement.
The best way to secure the oil wealth for the Guyanese people are 1) renegotiate the oil contracts to remove unfair contract clauses, such tax exemptions, and implement a fair cost sharing mechanism; 2) strengthening of the Natural Resource Fund (NRF), which is fed by the oil revenues, along the lines of the Norwegian Oil Fund; and 3) the Guyanese government only gets to spend the profits earned from the investments made with the NRF. The larger the NRF gets the more money will become available. The core of the NRF will however not be depleted.
Interest from NRF ?
What rates -.1% to 1% ?
Google central banks interest rates FMI
Most central banks interest rates are zero
or near zero …Japanese central bank -.1%
Minus point one percent.
What is interest rates of bank of Guyana (central bank) ?
Interest rates alone cannot fund the development Guyana needs.
When borrowing rates are so low it makes
sense to borrow for development rather than
using your capital.
Let’s see what new government decides does
next !
…
The Norwegian Oil Fund invests primarily in stocks across the globe. Their annual return has been in the range of 4-5%. The Guyanese can do the same, if they manage the fund in the NRF wisely and professionally. If the Guyanese are smart, the would ask to Norvegians to assist in managing their NRF.
“If guyanese are smart……
ask Norway for assistance ???
Ask a broker to make decisions for me !
Come on ! Get real !
Will Norway allow Guyana to join their “wealth fund” ?
Wake up and smell the roses my friend.
It’s not going to happen.
Let’s see how this one develops.
Always fact check before commenting further
Way forward….google has most answers !
Seek and u will find
Believe and make it happen
KARMA will get you.
Kamtan
@Kamtam: Norway has a long history of assisting Guyana, for example in forestry and in shipping. My late uncle, in his function as a minister in the Hoyte administration, was getting advise and assistance from the Norwegian government.
Just have a look at the Home Page of the Norwegian Oil Fund for more information:
https://www.nbim.no
Finally, I had addressed the issue recently on Guyanese Online:
https://guyaneseonline.net/2020/10/27/the-norwegian-sovereign-wealth-fund-a-bench-mark-for-guyanas-natural-resources-fund/
No matter how you “decorate” shite it remains
shite ! Whatever financial advisers/banks advise
me to do…do the opposite. Money printing aka QE (quantative easing) financial bubble will
eventually pop with few winners most loosers.
Market forces …..farces !
Until USD$ is finally replaced/complimented as
World reserve currency this bubble will continue
to expand eventually pop !
Sorry but my jury is still out on the “black hole”
What is a safe bet/gamble !
Forever sceptic/optimist on money matters.
Enjoy three UK pensions…
RAF military
Royal Mail (government)
State (old age p)
All three compounded for tax purposes
Two things are certain in life
Tax
Exit
Not complaining just enjoying life for what it is
Forever realistic
Kamtan uk-ex-EU
Kamtan, given your detailed response and insight, you appear the perfect assessment manager to run Guyana’s National Resource Fund! It would be a perfect example of taping into the waste knowhow of the Guyanese diaspora! Go for it, man! 😉
No thanks ! Money bores me !
Talk gardening/nature and I listen/learn.
Reminder
Am retired/retarded …enjoying nature
Good bad and ugly !
Try not to give financial advise unless requested.
K
Alea iacta est!
Go to this link for more information:
https://www.nbim.no
See my comments above….
No investment is “safe” as when the financial
bubble burst ….very few winners most loosers.
Enter the new kid on block !
Mr Crypto aka fantasy money ?
Go figure
Go google
K
Kamptan ya got so much…….time to start sharing???? my guy short coolie man (relax ) from Berbice, first in class London school of Economics.. way back when I asked him, told me, can’t touch it, might not own it. I am thinking, maybe he was right then, for sure he is right now.