Home Letters Thought before action when it comes to our nascent industry
I write to urge caution amidst the heightened passions and hollow promises which so often characterise Guyanese elections. This election is perhaps the most monumental in the whole of Guyanese history, for it comes at the same time when our oil industry is taking off. The wealth at stake, and the power of good or evil it will provide those who wield it, will surely set the tone for Guyana’s future.
It is vitally important that the Government keeps those revenues flowing. It seems to be fashionable of late for politicians and other Guyanese to suggest that Guyana could benefit from attempting to reopen and renegotiate existing contracts. Of course, Guyana left some money on the table when they were first negotiated – that much cannot be disputed. But to suggest that we are best suited by reopening them now seems to me, simply, a farce.
Why, you ask? Because to do so ignores the bigger picture. We may be producing oil now, but it is not in any meaningful quantity. That will come later, will the addition of more phases of development in the Stabroek and more discoveries elsewhere. What is the cost of disrupting that? We would also be fools not to consider what is taking place just next door in Suriname. If there is any indication that the reserves there might rival our own, what is to stop oil companies from fleeing Guyana if it seems that we do not respect the rule of law, or that they may get better terms there?
On this latter point, Guyanese should consider the example of Mozambique and Tanzania, the neighbouring African states. East Africa has seen a budding rivalry between the two, which have both discovered major offshore gas reserves. Yet, it has been a lopsided contest. Mozambique has moved quickly and decisively, granting attractive terms and arranging for major international operators to get projects online within the shortest possible timeframe. Their regulatory framework and petroleum laws have also been clear and thoughtful, reassuring investors.
Tanzania’s path has been one of errors and misjudgements. Its resources are still in the nascent phase after frequent construction delays for the onshore LNG export facility. The country has also established industry laws which provide no clear roadmap on production, commercial processing, liquefaction, transportation, storage or distribution of its natural gas resources. And amongst the most cited concerns for international investment is a new regulation that would allow the Government to apply laws retroactively, giving them the power to renegotiate already-signed contracts.
Much of the Tanzania context should be startling familiarity to Guyanese. We sit now in a privileged and unique position with the advent of oil production. We are the darling of the world’s oil industry. Let us not get carried away with our newfound celebrity and let us not be tempted to rash action when patience and deliberation would serve us better. Certainly, every effort must be made to wring out as much benefit from oil operations as is possible for Guyana. That does not mean a blunt approach is the best approach.