Oil, Government Take & Spending: Navigating Guyana’s Development Challenges – 23

Introduction

Today’s column concludes the discussion on the challenges facing Guyana in managing public expectations when spending its Government Take from the coming petroleum sector. I begin with an appraisal of the performances of the two remaining variables, (4 and 5). Variables 1-3 were considered in the previous column. After this, I shall wrap-up the column with a few brief observations on “best practices” that have been employed in similar situations worldwide.

Performance: Variable 4

As it turns out, the fourth variable, which was considered last week, is a variant of the third. Readers may recall, I had classed the third variable as constituting the two existential threats that Guyana’s petroleum project faces. These are the threats of an environmental catastrophe and Venezuela’s geo-strategic territorial aggression against Guyana. The fourth variable, considered here, is the risk of significant implementation delay.

However, while there clearly have been hiccups and a few moderate delays, the risk of significant implementation delay has been negligible to date. Indeed, at present the target of production start-up of Liza 1 for 2020, Liza 2 for 2022, and full ramp-up of production in the second half of the 2020s, is still on course.  Consequently, overall, there has been an exceptionally rapid transition from petroleum resource discovery to its commercialisation. Guyana’s experience has been truly phenomenal! In the space of only five years (2015-2020) it is projected that the country would have accomplished so much that confidence in both the private Contractor and public Authorities executing the petroleum project on time remains very high. While, as previously indicated, there is little euphoria in Guyana about this accomplishment, there is also little public expectation and/or speculation that the petroleum project will not happen…..

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