With newfound oil wealth reshaping the economy, can the country balance growth with sustainable development?
Mon 8 Jul 2024 16.00 CEST
Rebecca Parasnath is 23 and lives in a wooden stilt house without electricity or sewer connections on the outskirts of Georgetown, Guyana. Like much of the city, her neighbourhood, Wortmanville, is about two metres below sea level and protected by the Kingston Seawall, a 280-mile barrier built in 1860 to keep the sea at bay .
Georgetown is one of the world’s most vulnerable capitals when it comes to extreme flooding and rising sea levels. In 2005, the city was hit by floods that affected 290,000 people, a reminder of Guyana’s Indigenous meaning – “land of many waters”.
People walk along the seawall, which protects Georgetown. Photograph: Keisha Scarville
Even so, Parasnath pins her meagre hopes for a better life on Guyana’s new promise: oil and gas – the same fossil fuels igniting the climate crisis. Like many, she hopes to receive a $5,000 government cash grant, an urban plot to build her own house in a safer place and a scholarship to go to university. “They keep saying they will give us money from the oil, right?” Parasnath says, with just a hint of scepticism.
Since 2015, when US multinational ExxonMobil found oil in Guyana – then one of the poorest countries in the Americas – its 800,000 citizens have been swiftly climbing the ranks of nations with the highest GDP per capita, thanks to one of the world fastest-growing economies.
In 2023, the GDP of this “South American Qatar” rose by 33%, and is expected to grow by another 34% in 2024. Oil royalties and exports contributed approximately $1.62bn (£1.27bn) to the government’s annual revenue last year, with projections to increase to $2.42bn by 2024 and $7.5bn by 2040 – enough to dramatically boost the national budget, estimated at $5.49bn in 2024.
In the decade since ExxonMobil discovered the Liza oilfield, 190km (118 miles) off the coast of Guyana, the country has risen as a new world oil magnate. This former British colony has about 90% of the area of the UK but only 1.2% of its population. Its oil reserves are estimated at 11bn oil-equivalent barrels, which is 75% of the oil reserves of its giant neighbour Brazil.
Oil pipelines cross the estate of Elizabeth Deane-Hughes, a former lawyer, who had to fight to have them modified. Photograph: Keisha Scarville
The International Energy Agency estimates the offshore discoveries could mean Guyana’s 2022 production of 250,000 barrels daily will grow fivefold by 2030.
That makes Guyana a protagonist in the Latin America and the Caribbean oil rush. While Guyana is located in South America, it is considered a Caribbean country and shares cultural ties with its Latin American neighbours. Amid the global debate on transitioning away from fossil fuels, half the countries in the region – 16 out of the 33 – are involved in new, major oil and gas extraction projects.
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Guyana is betting on oil, as the global production and consumption steadily increases. Faced with a bullish world oil market, many in the global southask why Guyana, Ecuador, Brazil, Argentina or Mexico should be expected not to exploit such highly valued commodities.
‘Will you stop exploring yours?’: Latin America forges ahead on new oil frontier
Ashni Singh, Guyana’s finance minister, argues the country is within its moral rights to capitalise on its resources. Guyana devised its first Low Carbon Development Strategy “long before the discovery of oil”, he argues, making the country “a unique player in oil exploitation and environmental protection”.
Under the strategy, Guyana sought income to maintain its forests, leading to a $250m, five-year agreement with Norway. This funding supported a monitoring, recording and verification (MRV) system for transitioning to a low-carbon economy and participating in the carbon market. The country then became the first to certify its carbon credits, “combining its forest conservation efforts with global carbon trading mechanisms,” says Singh.
“The journey that led to ExxonMobil coming to Guyana, starting exploration, and eventually discovering oil has been a sustained effort to diversifying the pre-oil economy,” says Singh. “Our low-carbon strategy is not a response to Guyana becoming an oil producer.”
The amount of greenhouse gas Guyana emits is nonexistent. And even with all the oil production, the country will still remain carbon-negative
Oil royalties, he says, will not erase the low-carbon policy but facilitate a sustainable development strategy.
“Oil allowed us to move more quickly towards that destination where every Guyanese can live comfortably, get a good-quality job and educate their children with access to good-quality social services,” he says. “We want Guyana to become the first really developed nation in South America.”
According to the UN resident coordinator in Georgetown, Yesim Oruc, Guyana’s situation is indeed unique: a developing country with low deforestation rates – 97% of the country’s Amazon rainforest is intact – finding an opportunity for oil and gas-based development. Oruc praises the government’s ambition in energy transition, which foresees oil and gas royalties invested in hydroelectric power and renewable sources.
Most Guyanese support oil and gas exploration for the potential gains it will bring to society. Photograph: Andrei Netto/The Guardian
“As a small developing country, the amount of greenhouse gas Guyana emits is nonexistent,” says Oruc. “And even with all the oil production, according to the government’s calculations, the country will still remain carbon-negative.
“The oil that Guyana produces creates emissions elsewhere in the world. Guyana’s contribution to CO2 emissions, which is the global issue, is virtually nil. The point is, will the world economy refrain from consuming oil or not?”
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Oil and gas exploration has wide support. In economic, political and civil society circles, it is hard to find anyone who disagrees. Kester Hutson, president of the Chamber of Commerce and Industry, is enthusiastic about Guyana’s fast-paced economic development.
“What we are living right now, with the introduction of the oil and gas sector into the economy, is something we would have never imagined,” he says, ensuring the environment remains a priority. “There’s no immediate need to worry.”
Even critics of President Mohamed Irfaan Ali recognise the gains that fossil fuels can bring. Aubrey Norton, the leader of the opposition, criticises the royalties and terms of the contract signed with ExxonMobil and the policy of distributing the benefits of oil, but does not question the exploitation. “Oil allows us the resources to develop the country. The downside is that you have a government that isn’t focused on the development of the people of Guyana,” says Norton.
Jean La Rose, an activist leader who fights to protect Indigenous rights. Photograph: Andrei Netto/The Guardian
For Jean La Rose, a Goldman prize winner for her fight for the rights of Indigenous peoples – known as Amerindians – exploiting fossil fuels is a “very difficult question”.
“Guyana has encountered a lot of economic difficulties.” she says. “Our Indigenous communities need a lot of infrastructure and other forms of development to improve health care and education. So, the exploitation of our natural resources can help in some ways.
“But exploiting natural resources, [previously] in the form of mining for gold, diamonds and other minerals, even if it had benefited some Indigenous communities, also had negative implications for land and environmental rights, pollution and social problems.”
Many Guyanese are critical however of how successive governments have handled the oil boom and shared the proceeds. President Ali’s administration is often described as discriminatory against the black and Amerindian populations in favour of the Indo-Guyanese. The contract with ExxonMobil is also a sensitive topic.
Traffic backs up on the floating Demerara Harbour Bridge, south of Georgetown. Photograph: Keisha Scarville
“The relationship between the oil companies and the government of Guyana is one of disrespect for the people of this nation,” says Frederick Collins, president of the Transparency Institute Guyana. “The government takes the side of the oil company against the people, as has been seen in legal challenges to the way the Environmental Protection Agency is operating.”
Another recurring accusation is that the government disregards legality in infrastructure development projects. Elizabeth Deane-Hughes, a former lawyer, fought against land expropriations for a gas pipeline project that would pass through her family’s lands. After legal action, the pipeline was modified, but the clashes with the government left the impression that the state would go above the law to implement its project. “It’s all about the rule of law,” she says.
Rebecca Parasnath, 23, lives in a wooden stilt house without electricity or sewer connections on the outskirts of Georgetown. Photograph: Andrei Netto/The Guardian
The Guardian repeatedly contacted President Ali, Vice-President Bharrat Jagdeo, and Prime Minister Mark Phillips to comment on the allegations, but none responded. Alistair Routledge, the president and general manager at ExxonMobil Guyana, also did not respond to interview requests.
Caribbean leaders need to stop taking it on the chin and unite to defy condescending west | Kenneth Mohammed
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Despite the complaints, the pace of Guyana’s growth is noticeable out onit’s streets. Although Georgetown still faces serious infrastructure gaps, trucks carrying construction supplies and workers labouring on new highways, hotels, shopping malls and luxury homes in gated neighbourhoods are everywhere. New hospitals and schools are under development inside and outside the capital as part of the president’s public service promises.
We need to make sure that not only those causing this growth gain but also those at the bottom level also benefit
Georgetown’s mayor, Alfred Mentore, says: “Our capital’s GDP per capita grew 63% in 2022 and about 40% in 2023. The capital works and infrastructure growth is at a rapid pace.”
But not everything is resolved, says Mentore. “We need to make sure that not only those causing this growth gain but also those at the bottom level also benefit from this kind of trickle-down effect.”
And the debate around who benefits from the new oil rush money is a hot topic. A frequent question is whether Guyana can become a prosperous and egalitarian country – or whether it will be another state producing fossil fuels for the benefit of a few.
While hotels, shopping malls and luxury homes are being built, many wonder if the oil wealth will be felt by all. Photograph: Keisha Scarville
Coretta McDonald, a teacher and trade unionist, was elected as an opposition MP under the banner of distributing the new wealth. “I see a lot of optimism from government officials and scepticism from ordinary people,” she says. “Real people in the streets are not seeing, at least for now, the concrete benefits from the oil.”
In a country where the cost of food has soared – a meal at a fast-food chain can cost £25 – many feel they are paying the environmental price of oil and gas exploration but not profiting from the economic boom.
Mark Murray, a 38-year-old construction worker, is considering emigrating: “You can’t feed your family as you like. The average person cannot eat earning $20 a day in Guyana.”
• This article was amended on 10 July 2024. An earlier version called Guyana the “Latin Qatar” instead of the “South American Qatar” and said that the country was in Latin America. Guyana isconsidered part of the Caribbean but also has strong cultural ties with Latin America.
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Source link : https://amp.theguardian.com/global-development/article/2024/jul/08/guyana-banks-on-future-as-a-latin-qatar-in-high-stakes-gamble-over-oil-production
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Publish date : 2024-07-08 10:00:00
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