Guyana juggles oil riches, colonial poverty

Alameen Templeton

Guyana, a country of just 800,000 people, will soon pump 1.2 million barrels of oil daily as Exxon Mobil ramps up production of offshore oil fields, spewing billions of dollars into government coffers.

President Muhammad Irfan Ali’s administration plans to channel almost $2 billion this year into building roads, bridges, hospitals and developing agriculture. A further $1.9 billion will bring free gas ashore to help end regular blackouts, slash electricity costs and expand manufacturing of everything from fertilizer to aluminum.

It’s a long way from 2009, when the effort to combat global warming turned Guyana’s virgin jungle into a new kind of currency when the country sold carbon credits totaling $250 million to Sweden, essentially promising to keep that carbon stored in trees.

That windfall was celebrated nationally, but now it pales into insignificance besides the oil dollars being pumped ashore every day.

In 2015, Exxon Mobil and its consortium partners, Hess and the Chinese National Offshore Oil Corporation, discovered a bounty of oil under Guyana’s coastal waters.

The oil, now burned mostly in Europe, is enabling more global emissions — and producing wealth.

The deal with Exxon gives the oil giant most of the proceeds, some say unfairly for Guyana, but the deal has so far generated $3,5billion for the country.

The money has been earmarked to construct roads and other infrastructure, most notably a 152-mile pipeline to carry ashore natural gas, released while extracting oil from Exxon Mobil’s fields, to generate electricity. The gas is supposed to be provided free to the government as it is a byproduct of drilling and is often flared off anyway as waste. But no official sales agreement is yet in place.

The gas is cleaner than the heavy fuel used currently to generate electricity and the state says it will help transition to renewable energy. Right now, electricity costs constitute 40% of most businesses expenses, so cheaper and more reliable power is a presently the citizens’ most important consideration.

Climate change logic says Guyana’s capital, Georgetown, will be under water by 2030.

But while others are demanding to know what Guyana is going to do to nullify the emissions coming from the oil it’s selling, Genocide Joe in the US has approved oil drilling in the pristine Alaska wilderness a few months ago. Global environmentalists are saying little about that. And the US is producing and consuming more oil that ever in its history and nothing is said about that.

Foreigners are flocking to Guyana and are consuming much of its new wealth while its citizens are watching from the sidelines, complaining about the rise in food prices brought by the new influx.

Hyperinflation has made fish, vegetables and other staples costlier, and many Guyanese feel priced out of simple pleasures. The New York Times mentioned a  new rooftop restaurant, catering for “Guyana’s 1 percent” with a consultant chef from Brooklyn, that sparked a social media frenzy recently for serving a $335 cut of beef. That equals a security guard’s monthly pay.

Laws are in place setting quotas for oil and gas companies to employ and partner locally. That might do something to address the brain drain from the country. Two out of every five people born in Guyana end up living elsewhere.

So the oil boom and the local partner requirement have sparked a frenzy for passports and have fuelled debate over who, or what exactly, is Guyanese.

Land speculation has driven up prices and some high-flying real estate agents are doing the rounds, organising flats for expats costing up to $6000 a month as a two-tier economy starts taking shape.

Electricity is expensive and erratic with 96 power outs last year. Electricity is generated from heavy fuel, a tarlike residue left over from refining oil.

Guyana gained independence in 57 years ago, but only moved onto real democracy in the early 1990s, during which time strong environmental protections laws were put in place.

Now, environmentalists are saying the government is giving a free pass to the oil industry regarding environmental protections. Courts have rebuked the EPA for being too submissive towards the oil giants.

Guyana’s Environmental Protection Agency has waived the environmental assessments for every facility treating toxic waste or storing radioactive materials produced by offshore oil production.

The gas plant, too, has been given a pass. In January, the E.P.A. waived the environmental assessment for the proposed Wales power plant because Exxon Mobil, although it isn’t building the plant, had done one for the pipeline under the land.

The E.P.A. defended the decision. “It is good and common practice” to rely on existing environmental assessments, an agency spokeswoman said. The agency asserted its right to waive assessments and noted that the courts hadn’t overturned its exemptions, saying, “This no doubt speaks to the E.P.A.’s high degree of technical competence and culture of compliance within the laws of Guyana.”

Environmentalists point out the power plant sits above an aquifer that supplies drinking water to most of the country. The water table is shallow and fears are that future generations will not inherit clean water. “We are despoiling a resource far more valuable than oil,” one activist says.

The environmental board that decides cases is a sham. Its chairman, Mahender Sharma, heads Guyana’s energy agency, and his wife directs the new government company created to manage the power plant.

They have refused to step down and just a few days ago allowed the power company to keep its environmental permit without doing an impact statement.

The courts seem to be acting independently and recently overturned an insurance policy the oil majors must keep in case of accidents. It ordered larger policies than the existing $600million in case of oil spills needed to be signed soon. BP’s Deepwater Horizon accident in Florida a decade ago cost $64billion, for instance.

The court ordered the oil giants must sign unlimited liability for all distaster costs, or stop drilling. That decision is on appeal, with Exxon Mobil saying $2billion cover is sufficient. Exxon Mobil slammed the case outcome, demanding the courts make “predictable decisions”.

Lawyers say the battle lines are clear and the courts cannot be allowed to acquiesce to the oil giants.

The Guyana Sugar Company closed its doors a year after oil was discovered. Seven years later, the workers are still unemployed and this raises the question: how can people with a meagre education and without skills find jobs in the highly skilled petroleum sector?

While some voices speak about transforming sugar can into ethanol, the voices against drilling remain isolated; the more passionate debate is over how Guyana can renegotiate its contract to get a bigger take of oil proceeds.