Introduction
Last Sunday’s column introduced a simple basic ‘Setting’ (as energy analysts label it) or more commonly, analytical framework drawn from energy economics, under which the Guyana 2016 Production Sharing Agreement (PSA) will be appraised in coming columns. The Setting reveals, what is proposed as an appropriate design for Guyana’s fiscal terms. It suggests also that these are principally, a function of the risks facing Guyana’s petroleum finds. Such risks can be broadly classed as 1) Economic/social/political, which occur at the local, regional, and global levels to varying degrees. Undeniably, these impact both local and global supply and demand for petroleum products. And, as a direct outcome, oil and gas prices; 2) Geopolitical, which mainly reflects the Venezuelan border controversy, and, to a lesser degree, the threat posed from environmental mishaps impacting on neighbouring states; 3) Geological, which, in effect, reflects the offshore location and depth of Guyana’s petroleum finds.
