By Kiana Wilburg
Kaieteur News has an unwavering passion for oil and gas. That passion—perhaps way deeper than I can explain drawing on my mere 10 years of experience at this agency—is fuelled by the urge to see leaders avoid a phenomenon known as the “oil curse.” Countries such as Venezuela, Angola, and Nigeria stand as monumental examples of how significant discoveries without proper resource management, can leave a people worse off.
Since 2015, this newspaper has reported on the mistakes countries have made with oil and we have endeavoured to show just how complicated is the task before us. There are institutional factors we can control to ensure proper management and then there are other external variables that will affect our future earnings. I will avoid the technicalities as this is not my intention for this piece.
As we grow and continue to do our part to educate a nation desperate to fulfill its potential of being the Dubai of the region, it is critical that we understand our place in the world. It is crucial that we understand that this oil game is really ours to lose even as the world is facing an existential crisis given the damning effects of the climate change phenomenon.
It is well known that there has been an increase in the number of floods, tsunamis, forests fires, drought, and heat waves which are all unleashing damage and claiming lives like never before in different parts of the world. Mankind’s insatiable desire for fossil fuels is to be blamed for this tragedy that worsens annually.
Some environmentalists here and abroad say Guyana has to do its part and cease oil production as advised by bodies like the United Nations. On the other side of the divide, there are stakeholders who say Guyana can in no way contribute to the global phenomenon given that it is a carbon sink. This simply means that the vast nature of our forests enables us to store any Carbon Dioxide that is released and the ability of the forests to do this is quite significant.
During a recent interview on my show, Guyana’s Oil and You, Senior Director for Climate and REDD+ at the Ministry of Natural Resources, Pradeepa Bholanath stated that even if Guyana has 10 oil ships operating offshore, as well as the US$900M gas-to-power project on stream, the carbon emissions of those projects can in no way eclipse the immense carbon service provided by the nation’s forests. It therefore means Guyana can in no way be a contributor to the global problem and should, on those grounds, be allowed the opportunity to develop her resources in an environmentally sound manner.
Outside of this, there are several international reports which clearly state that it is the large carbon emitters such as the USA and China that must take the lead in lowering emissions as opposed to calling on countries like Guyana to quit while they are ahead. It is unfair and unreasonable to ask this of a newly minted oil State with exemplary green credentials.
For those who may not be aware, Guyana has started and ended the decade at a 0.05 percent Deforestation Rate. The Average deforestation rate globally in 2020 was 0.51 percent; our forest has been verified by the United Nations Framework Convention on Climate Change (UNFCCC) at 19.5GtCO2, one of the densest (high carbon forest), and one of the most diverse ecosystems in the world as part of the Guiana Shield Eco Region and the Amazon Basin; and we have maintained over 99 percent forest cover over the last four decades at a level of over 18 million hectares (or 44.5M Acres).
The government has also implemented a Cradle-to-Grave Control of Radioactive Sources which aims to protect people and the environment from potential adverse effects of ionizing radiation while enabling and fostering the safe and secure use of radioactive sources to promote sustainable socio-economic development. It also utilises oil and gas proceeds to fund renewable proceeds, capacity building, and Information and Communication Technology (ICT) access for the hinterland, poor and remote communities.
Importantly, the country has maintained its status of a net carbon sink. In fact, Guyana emits approximately 14M tons of CO2 annually from land-use sectors (mining and forestry). Because of our 18M hectares of largely intact forest, we can sequestrate approximately 154M tons of CO2 per year. At an output level of 750,000 bpd of the oil and gas sector by 2025, authorities expect greenhouse gas (GHG) emissions from the sector to be around 7443 kiloton CO2e/year. This is well below what our forest is capable of sequestrating.
Guyana is also on track to preserve, improve and multiply the foregoing achievements as month-long consultations continue on the Low Carbon Development Strategy 2030 which will be finalised by the first half of the year.
Now, let’s take a brief look at the energy demand outlook. The International Energy Agency said last year that oil would be needed for several years to come. The Paris-based body said it is estimated that energy demand will grow between 3 percent and 44 percent from now until 2040, while the share of oil and gas in the energy mix varies between 53 percent today and between 50-58 percent in 2040.
Even if the world acts decisively to limit global warming to 2°C by 2050 (sustainable development scenario), it is projected that global energy demand will continue to increase and, by 2040, the oil and gas share of the global energy mix will still be 50 percent, representing the major enabler for universal energy access.
With the foregoing outlook in mind, Guyana should not be prohibited from being a major player in this trillion dollar industry. It has one of the best quality reserves discovered in the last decade with more potential to uncover.
To date, the country has made over 24 major discoveries, bringing reserves in the Stabroek Block to over 10 billion barrels of oil equivalent resources. Four projects have been sanctioned by government thus far—Liza Phase One, Liza Phase Two, Payara and Yellowtail. Another is in line for approval soon.
In the face of all this, proper resource management remains key to avoiding the oil curse phenomenon. To ensure the hydrocarbon windfall coming our way leads to long-term and sustainable human development, we will need to arm ourselves with the architecture that allows for rapid learning, legislative reform that ensures Guyana gets its fair share of returns, strengthening of our institutions to better address fiscal arrangements of future contracts, and staying focused on economic diversification. Importantly, we need to increase our capacity urgently to conduct critical audits of expenses by ExxonMobil Guyana, the operator of the Stabroek Block. These have to be done in a timely fashion.
We will have to resist the temptation to spend wildly and quickly. We have to ensure the oil proceeds are used to stimulate value-added creation and boost the productivity of our traditional sectors to ensure regional and global competitiveness. Investments in education, health, infrastructure, housing along with fiscal capacity development are also necessary ingredients.
Above all else, the objective for Guyana must be to create a resilient economy where the oil wealth serves as a stimulus and not the backbone.
Make no mistake; Guyana has all the tools at her disposal to be a success, a model State for the Region and perhaps the world. The oil game is, therefore, hers to lose.
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Kiana Wilburg us a senior Journalist at Keieteur News. Energiesnet.com does not necessarily share these views.
Editor’s Note: This article was originally published by Kaieteur Newsl, on April 24, 2022. All comments posted and published on EnergiesNet.com, do not reflect either for or against the opinion expressed in the comment as an endorsement of EnergiesNet.com or Petroleumworld.
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energiesnet.com 04 25 20022
