The Economist March 26th 2022 41
The AmericasGuyanaInvest or squander?
I
t used to be a disused sawmill sur
rounded by fields of sugar cane. But since
oil was discovered off Guyana’s coast in
2015 the 52hectare site in Georgetown, the
capital, has been transformed into the big
gest logistics hub in the country. From this
waterfront spot, Guyana Shore Base serves
ExxonMobil, an American oil giant, and
other foreign firms drilling for oil off the
Caribbean coast. At two big berths along
the Demerara river ships pull up to offload
equipment for maintenance and pick up
supplies for hundreds of workers toiling
away on offshore rigs. The buzz at the shore base hints at how
a rush of petrodollars could transform one
of South America’s poorest countries. Au
tarkic policies introduced under socialist
rule in the 1970s left Guyana struggling
with unsustainable debts and sluggish
growth. Many of the country’s 800,000
people make ends meet doing the samethings their grandparents did: farming
rice, chopping timber or mining gold.
But since the discovery of light, sweet
crude in its waters, Guyana’s fortunes have
begun to turn. The country has received a
surge of foreign investment and built a
sovereignwealth fund to store its share of
the oil money. As a result, it was the world’s
fastestgrowing economy during the co
vid19 pandemic. Now it stands to gain as
the war in Ukraine sends oil prices soaring
past $100 per barrel and countries that rely
on Russian fuel scramble for alternatives.I’ll oil wells need you
The rising price of oil comes at an impor
tant moment for Guyana. The government
could get its hands on the oil money for the
first time in the coming weeks: it can with
draw a total of $600m from the sovereign
wealth fund this year. But it is unclear how
the bonanza will affect the country. Will a
sudden injection of petrodollars boost
muchneeded infrastructure and pull
thousands out of poverty? Or will it be
squandered or stolen?
ExxonMobil has found over 10bn bar
rels of recoverable resources in Guyana.
Exploration could soon begin in other ar
eas of the seabed. Even if all the new wells
turn out to be dry holes, more than 1m bar
rels of oil per day will be gushing out of
Guyanese seas by the end of the decade,
says Schreiner Parker of Rystad Energy, a
consultancy. That would make it one of the
world’s largest offshore producers. Rela
tive to its population, its output will be co
lossal. Whereas Saudi Arabia pumps less
than a third of a barrel, per person, per day,
Guyana could be pumping nearly four
times that by the end of the decade. The
speed at which production has started is
“unprecedented”, says Alistair Routledge,
president of ExxonMobil Guyana.
Oil has already boosted Guyana’s tiny
economy. Multinationals are setting up
shop. Local workers are making money
driving taxis, working as waiters or toiling
on building sites. The economy grew 20%
last year and 44% in 2020 (see chart on
next page). The currentaccount balance,
which reflects whether a country is a net
borrower or lender to the rest of the world,
is expected to turn positive this year.
The government is talking big about
channelling petrodollars into develop
ment. The latest budget, announced in Jan
uary, promised to raise government spend
ing 44% this year. There are plans to build
roads, schools and hospitals. With a new
pipeline and 300mwpower plant, Guyana
could use the gas produced offshore to re
duce the cost of electricity and jumpstart
manufacturing. New call centres promise
to create jobs in the region’s only English
speaking country.
However, Guyanese people need notA KAWANI
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