South America's second poorest nation is bracing for an oil boom that could catapult it to the top of the continent's rich list - and beyond. But can Guyana avoid the so-called oil curse and ensure that its newfound riches benefit all Guyanese?
Guyana is quickly becoming one of the hottest new oil frontiers on the planet.
It is estimated that over 11 billion barrels of recoverable oil resources have been discovered in the Stabroek Block.
Exxon is emerging as one of the biggest winners in this new oil hotspot.
The impoverished tiny South American country of Guyana has emerged as one of the continent’s top oil producers and is poised to become a leading global energy exporter. Since 2015 an Exxon Mobil-led consortium has made a swathe of high-quality oil discoveries in offshore Guyana in the 6.6-million-acre Stabroek Block, with the latest announced in July 2022. It is estimated those finds have uncovered nearly 11 billion barrels of recoverable oil resources in the Stabroek Block with further oil discoveries to come.
"Many people still do not get how big this is," then-US Ambassador to Guyana Perry Holloway told a reception in the capital, Georgetown, last November.
"Come 2025, GDP will go up by 300% to 1,000%. This is gigantic. You will be the richest country in the hemisphere and potentially the richest country in the world."
It may sound far-fetched, but with a population of around 750,000, in per capita terms, Guyana's wealth is set to skyrocket. ExxonMobil, the main operator in Guyana, says it has discovered more than 5.5 billion barrels' worth of oil beneath the country's waters in the Atlantic Ocean. Guyana’s recoverable oil resources will keep growing as further discoveries occur.
These developments point to Guyana becoming not only a major oil producer and exporter but that it has the potential to amass significant oil reserves. There is even speculation, based on the current rate of drilling success, that eventually Guyana’s oil reserves could overtake Brazil’s, seeing it possess the second largest oil reserves in Latin America and the Caribbean behind Venezuela. Exxon and its partners in the Stabroek Block are ideally placed to profit from Guyana’s rapidly expanding offshore oil boom.
The money would certainly be welcome. This former British colony - the only English-speaking country in South America - has high rates of unemployment and poverty.
But history carries a warning for Guyana. The discovery of big oil in other developing nations has exacerbated existing corruption, leading to the new oil wealth being squandered and stolen. It has become known as the oil curse. For example: Venezuela one of its neighbours has the highest oil reserves in the world but due to unregulated government spending and questionable policies it has faced one of the worst hyperinflations in the world. It has constantly been facing inflation rates of over 1000% per year since 2016. And in 2018 it had an inflation of over 130,000%. Sure oil acts as a boon for many poor countries to get rich faster but if not handled properly all the wealth and power from this boon accumulates in the hands of a few and the general population suffers even worse due to the environmental damage caused by processing and extracting oil. There are many such examples - Venezuela, the Middle east, Brunei, Nigeria and many more.
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