More planning, less ‘gloom and doom’ needed to prepare for oil fortune

-former US ambassador

Perry Holloway

Former United States Ambassador Perry Holloway is concerned that Guyanese don’t grasp the magnitude of the country’s expected economic takeoff from its impending oil production and as a result are not planning accordingly.

“I hear a lot of doom and gloom about a lot of things in Guyana but I understand that there are a lot of people saying, ‘We had gold, we didn’t really do much. We had bauxite we didn’t benefit that much…’ All true, but this is so much bigger than gold or bauxite or anything,” Holloway told reporters last week during his final meeting with the press here.

The ambassador, who leaves for his homeland today after the completion of his three-year tour of duty, said Guyanese need to educate themselves on the sector so that they can in turn hold their policymakers accountable, while preparing to tap into opportunities that will be afforded to them.

He reminded that while production will continue for at least three decades, citizens must bear in mind that oil is a non-renewable resource and must also make decisions for life after oil.

“This is a monstrous amount of oil and a large amount of money. You couldn’t do the math. Let’s just take a small number and say in 2025 you are producing 500,000 barrels a day, which is on the low end of the estimate. Assume it is worth US$50 a barrel—low estimate. You multiply that number of barrels and Guyana will get all the infrastructure costs paid by 2025. So Guyana will get more than half of that based on the contract. Do the math, it is a lot of money. It is a lot… about three hundred percent greater than what Guyana produces in a year now,” he said.

“So money is not going to be a problem. It is how you spend it and how you protect it and save it for the future. No one knows how long it is going to last … 20 to 30 years—I suspect it will be longer because there is more to be discovered it seems, but there will come a time when oil is not the answer. You have countries like Venezuela who had more oil than any other country in the world and people are starving. They are going through the jungle in Region One to come to Guyana. So oil is not an answer for everything if you don’t manage it wisely and know what to do with it,” he added.

‘Feet to the fire’

Holloway said that he would tell the “doom and gloomers” that while it is good to be cautious, they must also live in the present and hold their policymakers accountable for the resources at their disposal.

“You should try as much as one can try to hold your government’s feet to the fire. Try to get as smart as you can on the subject and get ready for it. It is going to be a rising tide that I believe will raise all ships, no matter what you do. I think there will be more work for journalists, ships, accountants, engineers, carpenters, you name it…,” Holloway said.

And although he believes that the likelihood of an oil spill here is minute, he said that the citizenry must be prepared.  The former US envoy said, “Everyone should be concerned about an oil spill. It does happen very frequently in the industry and we have been doing some training and technical assistance but the universal acceptance is when there is an oil spill, it is the operator that has the responsibility for cleaning it up and managing it. So, I think Guyana is lucky in this sense—you do have one of the largest operators in the world with the most knowledge, and ExxonMobil, I would argue, is the most safety-conscious company I have seen do their work. They are very concerned about safety. It makes good business sense because you have an oil spill, you have got tons of political issues, tons of environmental issues and you are not making money because the oil is there and not being sent somewhere.” 

He added, “So you should be worried about it, but Guyana should be preparing itself that if one were to occur, it would understand the terminology and provide guidance to the operators. Pretty soon, there will be more than one operator. ExxonMobil will not be the only person to discover. Do I think the chance of it happening is high? No. Do I think it is low? It is very low, but always is a possibility.”

The former US diplomat also rejected assertions that Washington’s relations with Georgetown are geared towards protecting ExxonMobil’s interests here.

“The US government has always been a staunch supporter and advocate for US Companies doing business in any country; Guyana is included. But all that we advocate for is a level playing field and equal treatment. In other words, in Guyana I don’t see ExxonMobil or any US company is treated any worse than Guyanese companies. They may all be treated badly some days and they might all be treated good some days, but they are not singling out American companies because they are American companies and treating them bad. So that is our primary rules of the game. That is our only advocacy whatsoever. The US government doesn’t get any money from ExxonMobil,” he said.

“If I were to ask people in the US government what is our number one interest in Guyana, I think it…still hasn’t changed. It has always been, for the last 20 years … good governance has been the overarching thing… human rights, at times LBGT rights. Local elections was a big thing…for 20 years, whenever we met with Guyanese officials, we asked ‘When are you going to have local elections?’ We have done that now, so congratulations to you,” he added.

‘Changing the stance’

And while some persons believe that the US’ shift in position on the Guyana-Venezuela border controversy was influenced by ExxonMobil’s 2015 oil find in this country’s deep waters, Holloway was swift to dismiss those assertions.

“We were working on changing the stance before the oil was discovered. I was in Washington and I was one of the people working. The stance was too conservative; it was a very lawyerly stance in the sense that we encouraged both sides to resolve this controversy peacefully, which is not a bad statement to say, but it didn’t go further than that. So even before oil was discovered, in fact, when oil was discovered no one knew it was going to be a big thing. It was important, but it wasn’t a big thing. So, the discovery of oil had very little to do with the change in our public talking points on the border controversy,” he said.

Further, he added, “I will say, what had more to do with that is what we have seen as, slowly, Venezuela’s democratic institution has been disintegrating before our eyes. People are starving, people can’t get medicine, that’s been concerning us for like four or five years and I think that was more driving the change in our talking point on the issue, rather than the oil was.”

Holloway was credited with being instrumental in helping to solidify Washington’s support for the acceptance of the 1899 arbitral award that settled the border controversy between Guyana and Venezuela, by current Deputy Chief of Mission Terry Steers-Gonzalez.

At a farewell reception for Holloway last month, Steers-Gonzalez highlighted the ambassador’s role in the US taking a stronger position.

“In large measure, because of Ambassador Holloway, the U.S Government now also ‘Calls on all parties to respect the 1899 arbitration decision.’ While some might discount this seemingly simple addition, most of us present tonight understand how truly big it was and is,” he said.

He contrasted the new position with Washington’s previous statement on the border controversy—while Holloway was awaiting confirmation by the US Senate to the post here—where it had only noted its support for “the timely resolution of the Venezuela-Guyana border controversy.”

“Ambassador Holloway actually logged this win before he even arrived here in September, 2015, while he waited in Washington for confirmation by the U.S Senate. Previously, we had simply ‘support [e]d the timely resolution of the Venezuela-Guyana border controversy,’” he related.

Guyana has moved to the International Court of Justice (ICJ) for the confirmation of the legal validity and binding effect of the 1899 award, which Venezuela has contended is null and void.

This country has taken note of Holloway’s efforts and expressed its gratitude, as Minister of Foreign Affairs Carl Greenidge said that while the change may seem minute to some, Guyana remains very grateful.

The former ambassador expressed that it is his wish for this country to use the resources from the oil sector and strive to realise its potential of being one of the richest and greenest countries in the world.

He believes that while no one model is best, Norway’s would be a good start and could be modified to suit Guyana’s needs.

“I think a great model is Norway. Norway is a great oil producing country, yet they are one of the greenest countries in the world. You are going to have this oil… [and once] that refined petroleum is sold, you are going to have this big amount of money coming and you can decide what you want to do with it; you want to turn the whole country solar or hydro? You could do it. So you are going to have the best of both worlds. Here in your country, you won’t have a need if you don’t want to. You don’t want to cut any more trees down, you don’t have to. There will be no economic need to cut trees down…I think you have a perfect situation. Right now, what is the challenge is…money—that is the problem. So it gets even easier—the more money you have, the easier to do it,” he said.

Holloway said that he plans to return to Guyana for a visit after the 2020 elections as a normal visitor and has in the past fondly joked that if Guyana realises its potential and uses the revenues from the oil sector to develop holistically, “I just might change my citizenship.”

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