Former PPP stalwart Ralph Ramkarran has stated that Guyanese are “blissfully” unaware of the potential income oil production will generate and what it would entail for the country, something which government has given no indication.
In his blog, “The Conversation Tree” Ramkarran projected that with increased exploration activities, if anything close to the lower figure of 15 billion barrels is discovered, for most Guyanese the future would be beyond consideration. He indicated that with reserves of only between 800 million and 1.4 billion barrels, poverty would be wiped out in a short time and Guyana’s per capita income of US$3600 would rise quickly.
Recently, American company ExxonMobil discovered that the second exploration well in the Stabroek block offshore Guyana has a recoverable resource of between 800 million and 1.4 billion oil-equivalent barrels. The US Geological Surveys has long estimated that Guyana’s offshore reserves are between 15 and 30 billion barrels. Forbes has predicted that production might begin in another five to seven years. More wells are expected to be drilled by ExxonMobil in the future and the amount to oil ii finds is unknown.
Ramkarran stated that if Guyana’s production is in the vicinity of 500,000 barrels a day—at a value of about US$80 per barrel—to which the price should eventually rise in five years, it will bring in US$14.6 billion of which Guyana’s take at the usual 40 per cent will be US$5.5 billion a year.
“Guyana’s per capita will move to about US$14,000 in the early 2020s. The Guyanese people are blissfully unaware of this potential income and what it would mean. The Government has given no indication,” he said.
He stated that while government is studying the experiences of oil countries, proposals should be laid for public scrutiny.
He added that the population needs to be educated and engaged on decisions made by government, while downsides such as in neighbouring Venezuela and Trinidad, need to be avoided.
One of the biggest challenges, he highlighted, would be to avoid corruption and oil dependency and to resourcefully use the income from oil to ensure that the economy is diversified.
“Maybe this is the opportunity for Guyana to finally realise its much-touted potential as the breadbasket of the Caribbean by investing in agriculture,” he said, adding that if Guyana is able to capture even a small portion of the Caribbean food market of US$7 billion a year, it would infinitely enhance the economy.
He noted that with the income from oil providing the capital to invest in infrastructure for agricultural development it would be a reality.
The existing economy
On the other hand, he stated that the existing industries could be improved, especially investments in sugar, which could return to profitability.
He said further that incentives for small- and medium-scale miners, would increase gold and mineral production and Guyana would be able to severely restrict log export and ensure foreign investors engage in value-added production.
“Measures to increase productivity in the rice industry could be undertaken by additional funding for research. Infrastructure investments in depressed communities, such as Linden, and numerous villages depending on subsistence agriculture, would create an enabling environment for investment in economic activity. Economic activities would diversify and expand,” he added.
Also, education, health and social services would see an enormous improvement in expenditure since additional funds would increase, thereby “providing a more educated and healthy population and a wider safety net for the less fortunate,” he said.
Professor Suresh Narine recently stated that Guyana should not forget its other industries when oil production comes on stream. He indicated that when the oil is used up, it is those same industries that Guyana will have to rely on. Thus, he posited that the country should invest in these sectors while educating the population on oil.
He said that while the oil find is exciting, if Guyana does not harness its revenues effectively, then development would be stifled and corruption would run rampant.
