Last Monday’s discourses between some of the country’s business and political leaders and senior representatives of Canada’s Newfoundland and Labrador Offshore Petroleum Board (C-NLOB) may well have attracted a great deal less public attention than merited on account of the understandable preoccupation with next Monday’s general elections. Nevertheless, when the focus of the engagement titled “preparing for offshore energy resources – the Atlantic Canada Experience” is examined, it becomes clear that it marked clear signs of a process of preparedness for a new and particularly significant chapter in Guyana’s economic history.
The Canadian visitors are among the very top officials of an important oversight and regulatory body in Canada’s oil and natural gas sector and their visit here sends perhaps the clearest signal yet that Guyana is currently in the throes of becoming an energy producer with all of the implications of realizing such an important economic milestone.
What the visitors sought to do was to offer Guyana expert guidance on the process of preparing for an oil economy, which, according to Canada’s High Commis-sioner to Guyana David Devine, Guyana is one the verge of becoming. According to High Commissioner Devine “the vast reserves of hydrocarbons present in Guyana’s offshore (areas) represent the promise of a better future for all Guyanese.”At the same time he alluded to the importance of taking the correct steps to “prepare for the benefits this bonanza will bring that will be shared by all sectors of society”.
The prospects are, to say the least, exciting. Guyana’s potential as a producer of oil and natural gas has been alluded to by respective governments as far back as the 1970s and the frustration of an economy that has proceeded in fits and starts over that period renders the prospects of large-scale oil exploration in Guyana all the more exciting. Certainly, we can anticipate significant increases in revenue that will provide funding for social and infrastructural development projects, education, health services and job creation. We can also look forward to the development of new skills associated with both the energy sector itself and with the various downstream industries. The energy sector will also provide more than enough revenue to invest in the necessary training for the range of skills that will be required in areas such as maintenance of oil extraction rigs and machinery and other specialized communication and other equipment associated with the industry.
If all this might seem more than a little intoxicating, High Commissioner Devine issues a caution which, in our particular circumstances, we would well to be mindful of. Sudden and significant increases in countries’ earnings have not always boded well for their development. Indeed, as the High Commissioner put it, “too many times citizens have seen their hopes of a better life go unrealized.”
In his own contribution to the forum Prime Minister Samuel Hinds, feeling perhaps less fettered by the constraints of diplomacy than the Canadian envoy was less succinct in outlining the consequences of failure to create regulatory frameworks for managing a potentially lucrative energy sector. He referred to unnamed countries where such failure had led to the creation of an environment that facilitated rampant graft and corruption. Examples of such practices have been well-documented in several countries including Nigeria, Mexico, Russia and Azerbaijan and in each of those countries abundant oil wealth has not done anywhere near as much as it can for raising the standard of living and eradicating poverty.
Even without the benefit of an energy sector Guyana is no stranger to graft and corruption and it is by no means inconceivable that in the absence of the regulatory measures to which both the Canadian High Commissioner and the Prime Minister alluded, Guyana can become swallowed up in an even deeper quagmire of corruption that could witness the failure to deploy the resources from the energy sector to other deserving areas of national life. There is, too, the danger that an oil-rich Guyana can become afflicted by what is known as the “Dutch disease,” a phenomenon that describes the decline in the manufacturing, agricultural and other sectors once oil wealth begins to kick in.
As yet, at least as far as we are aware, there is little work being done to create the regimen of regulations that will protect us against the pitfalls that could derive from becoming an oil-producing nation. Apart from the considerations associated with protecting the returns of the industry from what so often appears to be profligate and unaccounted for public spending, there are also considerations that have to do with protecting the environment and ensuring the safety and health of the people who will have to work in the sector. The privilege of being an oil-producing nation brings with it both power and responsibility and last Monday’s forum provided a timely and, in Guyana’s particular circumstances, relevant reminder.
